Hu is Xi?

Who is Xi Jinping?

VOA News. Source: Wikimedia

Xi Jinping is the General Secretary of Communist Party in China. He presides over the largest country in the world by population and the second largest economy in the world. He grew up during the tumultuous Mao Zedong years. His father was a high-ranking Party official in the ‘50s, but was purged from Party and sent to work in a factory in the interior of China when Xi was 10. His home was ransacked by students, and one of his sisters was killed during the Cultural Revolution.

Xi survived this period, however, and went on to study engineering in college and later joined the Communist Party himself. In the mid-‘80s, he was part of a delegation sent to study agriculture in the U.S., and he stayed two weeks with a family in Muscatine Iowa, a farming community of 23,000 people. It is said that this trip to the self-proclaimed “Watermelon Capital of the World” made a lasting impression on him. From 1985 to 2007 he served as a party functionary, and later Governor, of the fast-growing coastal provinces of Fujiang, Zhejiang, and Shanghai.

Xiamen in Fujiang, China. Photo: Popolon. Source: Wikimedia

Xi’s signature policy has been a strict anti-corruption campaign. When he succeeded Hu Jintao in 2013, it was assumed that he would continue the tradition of limited leadership terms that began after Mao died in 1976. He is the fifth Paramount Leader of the People’s republic since then.

But yesterday the People’s Congress voted to remove the term limits China has had on its leader since 1982, which they adopted following the tumultuous Mao Zedong years. This doesn’t necessarily mean that Xi will be President-For-Life, the way many autocratic leaders have anointed themselves, from Venezuela’s Hugo Chavez to the Kim dynasty in North Korea. China is a huge, diverse country with a broad cross-section of interests and constituencies. But one of its most significant problems has been corruption, something that all closed societies struggle with.

Abolishing term limits strengthens Xi’s power, something needed in any struggle against embezzlement and sleaze. Corruption is an informal tax on an economy, creating a wedge between producers and consumers. The funds from graft and bribes typically aren’t redeployed back into the system to facilitate growth. Rather, they’re spirited to some safe haven, enriching the gatekeepers but holding the economy back.

Xi – like all of China’s leaders — is trying to maintain the balance between order and openness, stability and growth. You can fight corruption with transparency and openness, but without strong institutions and the rule of law this can result in chaos and anarchy. Xi’s experiences in the Cultural Revolution – living in a cave, losing a sister – would make him wary of those risks.

Scene from a revolutionary opera. Photo: National Archives. Source: Wikimedia

Let’s hope he’s equally wary of the risks of absolute power. All power corrupts, and absolute power corrupts absolutely.

Douglas R. Tengdin, CFA

By |2018-03-12T08:13:47+00:00March 12th, 2018|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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