China's Communist party to meet in crucial 19th National Congress as Xi Jinping tightens his grip

 
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President Xi Jinping may elevate his status to rival that of Mao Zedong (Source: Getty)

The Chinese Communist Party will meet this week to rubber-stamp its economic policy direction for the next five years, with President Xi Jinping expected to tighten his grip further on the leadership.

The eyes of economists and foreign policy analysts from around the world will be focused on Beijing starting on Wednesday 18 October as 2,287 delegates attend the 19th national congress, representing China’s political elite.

The congress, which is held every five years, will be used to reshuffle the seven-member politburo standing committee, likely allowing Xi to cement his position as the official “core leader” of the party.

Read more: New Silk Road for China will be open to all says President Xi

“It’s likely to be a confirmation that Xi Jinping is the strongest political leader [in the country] in 40 years,” said Douglas Morton, head of Asia research at Northern Trust Capital Markets.

Xi may choose to assert his power symbolically by adding a “Xi Jinping Thought” to the country’s constitution, putting him on a par with all-powerful leader Mao Zedong, who died in 1976.

Investors will be looking for signs that authorities will act to rein in the build-up of debt, particularly in the bloated state-owned enterprise sector. Central banks and financial agencies such as the International Monetary Fund have repeatedly warned that the borrowing spree represents a threat to global financial stability.

Read more: IMF: China credit boom could lead to "crisis" without decisive action

Emil Wolter, emerging markets portfolio manager at asset manager Comgest, said: “Traditionally economic activity, especially investment and credit growth, have tended to accelerate in the year after a party congress. We hope the Chinese political leadership will act differently this time.”

The conference could also offer further detail on Xi’s flagship economic programme, One Belt One Road (OBOR), which aims to embed China as the dominant superpower in the Eastern hemisphere, and potentially even stepping into a geopolitical breach left by the US.

The OBOR programme will see massive investments in trade routes over land, the belt, and sea, paradoxically the road. Morton described it as dwarfing the post-war Marshall Plan, in which the US poured money into European economies to stimulate growth.

Read more: China's Xi: Emerging markets are 'main engine' of global growth

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