Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Shocked Investors Scour Xi’s Old Speeches to Find Next Target

As $1 trillion evaporated from Chinese stocks last week, some investors realized they hadn’t paid enough attention to the country’s most important man: President Xi Jinping.
Traders began scouring Xi’s speeches to find clues about which industries might be next after his administration abruptly smashed the country’s $100 billion for-profit education sector, according to several employees at Chinese financial firms who asked not to be identified. Screenshots of key passages made the rounds: Xi denouncing “obscene” online content, education inequality and housing-price speculation in school districts.

A government database of more than 11,000 speeches since Xi took power in 2012 became a key resource.

The jitters continued this week, with Tencent Holdings Ltd. shares plunging after the Economic Information Daily - an offshoot of the official Xinhua News Agency - decried the “spiritual opium” of online gaming, sparking worries that the sector might be next on the chopping block.

The selloff extended to Japanese gaming developers that have licensing deals with Tencent, China’s most valuable corporation.

“Investors and analysts have tended to dismiss party-speak, usually because it’s so impenetrable,” said Dan Wang, a technology analyst at Gavekal Dragonomics in Shanghai, who regularly reads the Qiushi Journal, a bi-monthly Communist Party publication.

“But much of it is perfectly readable, and we should know at this point that Xi usually follows through on what he says.”

Reading the signals from Beijing has always been a crucial component of doing business in China.

But the abrupt education overhaul has prompted even seasoned investors to reassess how they interpret statements from Xi and top officials in his government - a task made more difficult by the fact that many of his speeches are classified and only made available to the party elite.

Compounding the problem is Xi’s likely push for a third term ahead of a once-in-five-year meeting of party leaders next year in which key positions are up for grabs.

That has rank-and-file members all eager to please Xi, who has amassed more power in China than any leader since Deng Xiaoping in the 1980s and 1990s.

“With power mostly centralized in his hands, Xi now can change status quo policy quickly and even without much warning,” said Victor Shih, associate professor at UC San Diego and author of “Factions and Finance in China: Elite Conflict and Inflation.”

“On top of quick policy changes, officials below him will want to zealously implement any new policy or ‘spirit,’ the party’s term for policy direction,” Shih added.

“This zealous implementation will often take place regardless of the longer-term consequences because officials are afraid of being accused of lackluster implementation.”

The opacity in China’s political system forces investors to gauge the importance of various statements from officials and state-run media.

After many market players shrugged off Xi’s criticism of out-of-school tutors back in June, this week’s Tencent selloff prompted them to dig up a Xi speech from March in which he identified “a lot of obscene and filthy stuff online” as one of a number of social problems that need to be addressed.

One element to watch is which agency makes the announcement, and over the past decade there’s been an increasing amount of joint statements that span different arms of the government and the party.

China’s ban on profits for its tutoring industry was jointly issued by the general offices of top government and party bodies - the State Council and the party’s Central Committee - giving the decision more authority than any single department.

While China’s policy moves can feel ad hoc particularly to foreign investors, the changes are quite targeted on certain sectors, said Jason Hsu, founder and chief investment officer of Rayliant Global Advisors.

“Right now, it feels like throwing the baby out of the bathwater and every industry is at risk,” he said. “If you are more aware of what the Chinese has been communicating all along, you know what they will do.

Real estate, health care, retirement living -- these are identified by policy makers as undermining societal harmony, and the quality of life.”

Still, authorities have sought to address misunderstandings in the market. Following the wild selloff last week, the China Securities Regulatory Commission promised more transparency and policy predictability in a Q&A posted on its website Sunday.

State media have also either tweaked articles or published commentaries to try to calm market jitters.

On Tuesday, the Economic Information Daily removed the link to its piece on online gaming, while the People’s Daily newspaper - the party’s official mouthpiece - published an editorial in its overseas edition stressing the need for government, schools, families and broader society to work together to better protect children from excessive gaming.

Markets were likely to remain volatile as investors adjust.

Even while it’s now “fairly obvious” which sectors Xi wants overhauled, “the timing and sequencing of Beijing’s regulatory actions will remain chaotic,” said Jude Blanchette, Freeman chair in China Studies at the Center for Strategic and International Studies.

“The scope and severity of the current regulatory storm looks obvious only in retrospect,” Blanchette said.

“I’m not aware of anyone who read Xi’s 2018 speech on education and said, ‘He’s going to crush the for-profit education sector in three years hence.’”
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
Thirteen Killed in Russian Attacks Across Ukraine
High-Profile Incidents and Political Developments Dominate Global News
Netanyahu Accuses Western Leaders of 'Emboldening Hamas'
Ukraine and Russia Conduct Largest Prisoner Exchange of the War
×