Andrew Collier (@acollier): Xi has lost a lot of political face in China. Was aggressive in the South China Sea and had to backtrack. Wants to bypass the bureaucracy – “I’ll just decide with my cronies” – but that makes for ineffective governance.
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Andrew Collier, managing director of Orient Capital Research in Hong Kong and author of Shadow Banking and the Rise of Capitalism in China, in re: The latest on the trade talks and the Chinese economy. Andrew called some jobs sites in China to see who was looking for work; learned that 90% of he people coming looking for work had been fired from their previous jobs. Other data showed a 22% decline in jobs available, China Daily and Global Times are both soft-pedalling the just-ended trade talks with the US, whereas Washington is trumpeting how well the talks went. Trump won’t get an end to IP theft and illegal state subsidies, but he will get [some concessions]. He’ll want to go to a big dinner in Davos and proclaim his success. Beijing sees the US and Chinese stock markets as bellwethers, and ardently doesn't want a downward spiral. Hong Kong is a strange bubble place: property mkt, capital in from Mainland, and a Southeast Asian commercial center. Value chain: cotton growers having to move supply chains out of China in Vietnam – very significant. Has Xi changed his position in the last year? Definitely – he’s lost a lot of political face in China. He jumped out aggressively in the South China Sea and has had to backtrack. No Fourth Plenum of the Central Committee in 2018. Xi is trying to bypass the bureaucracy – “I’ll just decide with my cronies” – but that makes for ineffective governance. Mao did that; held meetings only to purge his opponents. There’s no coherent opposition to Xi Jinping. Jiang and previous leaders have all effectively been sidelined. Guangdong’s most recent PMI has been suppressed— that’s significant. We knew there’d be a slowdown, but we don't want a crisis. Can China take a recession and be transparent about it? I think there’ll be forced reform: much less lending; instead, might apply capital to more efficient matters.