Xi Jinping's Speech: "Housing Is For Living Rather Than Speculation"

Xi Jinping delivered a three and a half-hour speech at the opening of China’s 19th Party Congress, the once in five years mega-Communist Party gathering (previewed here), to herald a ‘new era’ of power (a term he used 36 times), consolidating his position as perhaps the most influential Chinese leader in decades. While he did lay out  guidelines to develop China in this ‘new era’, bottom line: Heavy in superlatives, light on specifics.

It was the year's most carefully politically-staged global event, best understood by the related trivia gleaned from party officials. The drafting process involves 4,700 individuals, 59 organisations, reports from 25 think tanks, nine research committees and 6 discussion forums, hosted by Xi, to hear suggestions. Xi walked into the Great Hall of the people to marching band music with delegates clapping in time. When highlighted the role of Marxism in 21st century China, he was greeted by lots of applause from delegates.

A room where everyone agrees, and nobody argues. In short: Marxism in action.

Anyway…what about policy, economics and China’s credit bubble?

Obviously, not everything is said explicitly, so we are forced to employ the dark art of interpreting both what’s said and what’s not said. On that note…there has been speculation that Xi will take further action to contain the credit bubble after he’s solidified his own position at the Congress. Xi vowed to continue to work to reduce the debt load and make further capacity cuts. This follows the head of the People's Bank of China, Zhou Xiaochuan’s comment this week that Chinese companies have too much debt. Perhaps the most interesting question is how much significance should be attached to Xi’s comment  "housing is for living rather than speculation''… a soundbite which he reiterated.

Talking of what was not said, there has been some discussion regarding the prominent place given to Jiang Zemin. Some journalists noted that Jiang implemented difficult economic reforms in the 1990s, unlike Xi’s immediate predecessor, who was the architect of the credit boom. Maybe there’s something in it, but it’s very tenuous.

Xi stated that China will “deepen interest rate and exchange rate reform” – which was directionally unhelpful for traders – and will boost the strength of state companies to defend against systemic risks. The Yuan gapped higher as Xi started speaking, but it probably “had to.”

While the Yuan strengthened, the PBoC was undertaking its largest open market operation since 18 September 20177, injecting RMB 270 billion into the financial system. Xi repeated the government’s mantra that (obviously) economic growth is not balanced, or efficient, innovation is poor and the real economy needs to be improved.

There was no reference to economic growth targets, although Xi stated that quality of growth, rather than speed, is the priority. Most commentators are taking this to mean no change to 6.5% annual GDP growth. Maybe... but it’s not certain.

From an overseas perspective, Xi outlined the need to reduce entry barriers for foreign businesses by “large scale”, which made us wonder whether he’s concerned about too little growth going forwards. In a truly bizarre claim, he stated that China wants to “contribute to global ecological security”, and complimented his nation for leading the global debate on climate change. Debating is one thing, we suppose.

Corruption was, unsurprisingly, a major theme in the speech and is the biggest threat for the Communist Party, according to Xi. Having said that, progress has been made "We have taken out tigers, swept flies and hunted down foxes" and the Party will “continue to purify, improve and reform itself.” The Party members were encouraged “resists pleasure seeking, inaction, sloth and problem avoidance.”

In the wake of Brexit and Catalonia, Xi made the veiled threat that “opposing behaviors” must be prevented from “splitting the motherland.'' China would not allow any separation from China’s territory, which obviously includes Taiwan.

The longer-term plan is divided into periods. Between now and 2020, Xi said that China would complete the building of a moderately prosperous society. The realization of socialist modernization will be achieved after 15 years of hard work in 2035, with the “golden era” (our term) of prosperity by 2050. "Socialism with Chinese characteristics is now flying high and proud for all to see." Xi claimed.

Finally, Xi promised that female and ethnic minorities will be elevated in Chinese society, which seemed “prescient” given the observations of Bloomberg’s Pete Martin in the auditorium. “`Twelve women in red coats and four men in black coats fanning out to serve tea on stage -- perfectly synchronized. The four men are serving the leaders in the front row and the 12 women are serving those seated behind them.''

Comments

techpriest Arnold Wed, 10/18/2017 - 06:38 Permalink

When business is required to dance with the Party, when money is not allowed to go overseas, and when the stock market is a truly rigged game where you can go to jail for selling too much, and inflation will wipe out the 5% interest in a Chinese savings account, how else can you invest but stockpile gold and housing?

Effect, meet cause.

In reply to by Arnold

doctor10 TheSilentMajority Wed, 10/18/2017 - 06:20 Permalink

he dosn't "get it" ...housing is a simple collateralization tool for a nation's creditors...and when a nation is completely in hock-debt to GDP >100% -you lose control of your nation to those creditors/bankerz attempting to conserve their collateral.  When that happens the peons and peasants start to lose whatever "freedoms" they have enjoyed to the bankerz insecurities regarding their extended credit. The politicians in between either facilitate the process -think HRC types-or get in the way...think JFK types.

In reply to by TheSilentMajority

Escrava Isaura doctor10 Wed, 10/18/2017 - 11:55 Permalink

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Darn’t. You got the very first and the very last (Kennedy) statements wrong. First: Jinping made that statement because he gets. Last: Executive Order 11110 issued by Kennedy on June 4, 1963. The order allowed the Secretary to issue silver certificates, if any were needed, during the transition period under President Kennedy's plan to eliminate Silver Certificates and use Federal Reserve Notes. https://en.wikipedia.org/wiki/Executive_Order_11110  

In reply to by doctor10

LightBeamCowboy TheSilentMajority Wed, 10/18/2017 - 10:59 Permalink

I've been saying for 30 years that unrestricted use of real estate as an investment medium would have pernicious effects, especially on housing for low-income people. The irony with Xi mentioning this is the degree to which Chinese hot money is fueling RE speculation around the world, but particularly on the west coast of North America. However, as a liberty-minded person, I've never been able to dream up a policy solution for this problem that didn't smack of, well, Communism.

In reply to by TheSilentMajority

BritBob Wed, 10/18/2017 - 06:14 Permalink

Ah politics and reality - really two different things.China – Argentina – the FalklandsIn tune with Macri's words, Xi Jinping thanked Argentina "the support they have given us for our claim of a single China as we support theirs for the Falkland Islands."  (Telam 17 May 2017)Suppose China didn't take territory in the 19th century?Falkland Islands – The Usurpation (1 pg): https://www.academia.edu/34838377/Falkland_Islands_The_Usurpation 

Golden Showers Wed, 10/18/2017 - 06:19 Permalink

Niggers in China.China has come a long way, baby.We're gonna elevate you and re-educate everyone else because I'm a little dick chinese businessman politbureau sellout faggot who doesn't give a fuck about the fact that there's hundreds of Chinese pyramids and lots of caucasian Chinese and we fucking destroyed Tibet and faked the Dali Lama but now we're going to completely fuck everything and elevate minorities in China because we're hypocrites.Chinese people are selective, racist ignorant retards on high and the coolest motherfuckers you'd ever want to play Dungeons and Dragons with at home.Little Chinese commie murdering life hating liars are pretending to be human. Totally amazing.What about Tienamin Square then you fucking lying scumbags?Go do a favor for the world and leave China to the Chinese instead of throttling it with your murderous psycopathic bullshit and walk the earth. Oh, you can't do that because you are weak, cowardly children sucking the tits of your whore master just like the good Chinese do to you.Shame what a wast of 1.5 billion losers does to this planet. All the rest of your defecting real people can't even say half what I just did.Fuck you China. You are murderers.

Batman11 Wed, 10/18/2017 - 06:38 Permalink

Don't you want to blow up your economy like Australia, Canada, Greece, Ireland, Norway, Spain, Sweden, the UK and US?All the idiots are doing it.The real idiots, like the US, leverage it up with derivatives.

Byrond Wed, 10/18/2017 - 06:39 Permalink

Trump should suddenly shut down Walmart and Amazon for one month just to demonstrate China's dependency. But maybe Americans would realize that they're not dependent. What then? 

Byrond Wed, 10/18/2017 - 06:44 Permalink

By 2050 we'll have entirely destroyed the environment, and this will usher in a golden age for the 10,000 remaining humans who live in Alaska, which will be a tropical paradise. 

To Hell In A H… Wed, 10/18/2017 - 07:33 Permalink

Xi Jinping is spot on, but this level of intellect will place you on the crazy list. Westerners have taken for granted the madness that home values are meant to rise for ever and ever, where wealth can be extracted. Blame neoliberalism, neoclassical economics and the Chicago school in particular.My parents London inner city house was valued at £3.7 million this year. My mum and dad purchased it in 1981 for £29K, when Paddington had a large Afro-Caribbean community. The area has gentrified beyond belief in the last 25 years. Even the council estates have gone upmarket. My mum is the definition of property rich, but cash poor.