But Xi remains committed to the reform agenda, and has shown a willingness to trade some state-driven economic growth in exchange for reform. His anti-corruption campaign is more than cosmetic: it’s having a real impact, and these political consolidations go hand in hand with his administration’s ability to push for more open economic and social policies.Ĭhina’s waning economic growth has investors bracing for Chinese leadership to revert to the old model of state-driven stimulus measures, jeopardizing Xi’s vision for a digital age economy based on domestic consumption. Former President Jiang Zemin recently announced that “the footprint of this anti-corruption campaign cannot get too big.” Hu Jintao, Xi’s presidential predecessor, echoed these concerns, warning that the campaign shouldn’t go too far.īut in a promising sign, Xi Jinping pushed against powerful elites for a year before they began to oppose him. Within other circles of power, Xi Jinping’s anti-corruption campaign might trigger backlash that could slow or halt the economic reform process. For the first time in five years, more of China’s rich are extremely confident about their country’s economy than they were the year before. It’s telling that China’s wealthy are bullish about the economy, even as they find themselves more likely to leave. This exodus is a sign of successful economic reform, because opening the economy and fighting corruption will threaten the vested interests of many of China’s super rich, prompting some of them to safeguard their fortunes overseas. In a recent survey of China’s wealthiest citizens (defined as having a net worth above $1.6 million), 64 percent said they have already left the country or are planning to leave, up from 60 percent in 2013. Let’s start with the diaspora of Chinese elite. However, in all of these instances, there is reason to believe that the economic reform agenda will remain on track. And investors are worried that faltering economic growth - a “new normal” of 7 percent growth, rather than the 10 percent or more of past years - will force China’s leadership to return to traditional stimulus measures, instead of continuing with the current pace of reform. Key leaders are concerned that Xi’s anti-corruption campaign is going too far, threatening to create fissures among powerful political factions. Recently, we’ve seen wealthy Chinese leaving China. Yet warning signs surrounding the economic reforms are giving potential investors pause. If these economic reforms succeed, they will unlock huge opportunities for tech companies that benefit from rising domestic consumption and a growing middle-class that has embraced the Internet. President Xi Jinping’s reforms are ambitious and unprecedented, and seek to transform the Chinese economy from a state-stimulated growth engine to a digital age, middle-class, consumer-driven economy in a country of more than 1.3 billion people. Online shoppers received half of those packages. There were over 6 billion parcels delivered in China in the first nine months of 2013 - up a staggering 61.2 percent from the same period a year prior. China’s domestic consumer market is rapidly growing, and e-commerce is perhaps the most robust segment. There are also compelling reasons for global investors to get excited about these offerings.
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