Xi Jinping’s 100-minute speech at the commemoration event of the 40th anniversary of China’s reform and opening-up was a disappointment to analysts and economists. The speech, which appeared an obvious opportunity for Xi to announce new reforms, was instead rather vague.
“He talked about plenty of reform principles but did not announce specific reform measures,” wrote Ken Cheung, senior Asian FX strategist at Mizuho Bank, in a Tuesday note.
Some analysts said the overall purpose of the speech was to double down on China’s authoritarian political system, while others picked up the theme that China’s reform and opening-up is not crucial to China, even under US pressure. Xi stressed that Chinese reforms would happen at a pace decided by the Communist Party, not by other countries.
“One could interpret [the speech] as ‘United against the West’ rather than ‘Reform to please the US’ or at least ‘Reform for our own good’,” Alicia Garcia Herrero, chief economist of Asia Pacific at Natixis, wrote in a December 18 note.
“The key question is why China is cornering itself with the self-reliance mantra, which has somewhat of a Soviet Union-type flavor,” Herrero added. “The answer might be that China’s leadership may have come to the conclusion that an era of strategic competition and increasing de-linkage of the Chinese and American economies has just begun and cannot be stopped.”
Researchers at consultancy Trivium China interpreted the speech as a reinforcement of the Party’s leadership.
“Xi is firm in his conviction that the Party’s leadership is central to China’s past and future success,” they wrote in a Tuesday note. “But – and this is key – the Party’s success is due to its ability to adapt and change.”
On the same day of the speech, a spokesperson of the Foreign Ministry of China parroted one of the most cited sentences of Xi’s speech as she was asked to comment on whether China may initiate structural changes to ease the US-China trade tension.
“We must resolutely reform what should and can be changed, and resolutely not reform what shouldn't and can't be changed,” she said.
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The People’s Bank of China (PBoC) resumed open market operation on Tuesday after a 36-day suspension. The central bank injected Rmb160bn ($23.2bn) via a seven-day reverse repo.
Local media speculated that the reason for the liquidity injection is to satisfy higher liquidity demands as well as rising deposits at the end of the year.
The overnight Shanghai Interbank Offered Rate fell slightly to 2.625% on Monday from 2.655% on the previous close.
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China’s holding of US Treasuries fell for the fifth consecutive month in October, according to official data from the US Treasury published on Tuesday. As the largest holder of US treasuries, China lowered its holdings by $12.5bn to $1.14tn, the lowest level since mid-2017.
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The Ministry of Finance (MoF), the State Administration of Taxation (SAT) and the China Securities Regulatory Commission (CSRC) jointly announced on Monday that they would extend the tax exemption on capital gains to mainland individuals selling MRF scheme-eligible Hong Kong funds.
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The China’s National People's Congress Standing Committee has scheduled its next bimonthly session for December 23 to December 29 to review a series of laws including the draft of the Foreign Investment Law and draft revisions to the Patent Law, according to a notice by state media.
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The Securities and Futures Commission of Hong Kong and the CSRC held their seventh regular high-level meeting in Hong Kong to discuss matters regarding cross-border enforcement cooperation, according to a press release on December 18.
Among others, topics such as investigating deeper into cross-border illegal activities, sharing information for dual-listed companies, and organising further training and case study workshops were discussed.
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The National Association of Financial Market Institutional Investors (Nafmii) updated the list of approved investors in the private placement market on Monday, according to an official announcement. The number of eligible banks and financial institutions was increased to 180.