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China’s Xi Jinping promises economic ‘miracles,’ Asian stocks drop



Asian stocks edged down after Chinese President Xi Jinping made a gloating speech lauding his country’s economic progress, and promised to produce “miracles that will impress the world.”

In a one-and-a-half-hour-long speech at Beijing’s Great Hall of the People on Tuesday, as cited by CNN, Xi praised China’s domestic economic growth but failed to mention any concrete or specific plans.

Xi’s widely-anticipated speech celebrated 40 years since former leader Deng Xiaoping launched his campaign of “reform and opening up” China’s economy, which led the country’s growth from poverty to the second-largest economy in the world.

But Asian stocks fell after the speech, with China’s benchmark Shanghai Composite Index ending the day down 0.8%. Hong Kong’s Hang Seng index also dropped by more than 1% in its last hour of trade, and Japan’s Nikkei fell 1.82% at the end of the day.

Read more: ‘Grinch-like’ US stocks are on course for their worst December since the Great Depression

Students prepare for the celebration of 40 years since China’s “reform and opening up” campaign at Beijing’s Great Hall of the People on Tuesday.
Jason Lee/Reuters

Xi on Tuesday pledged to continue supporting China’s private companies and state-owned enterprises, but failed to mention how he would do so exactly, Reuters reported.

He also gave no details of China’s growing domestic and international economic problems, such as slowing growth, the burgeoning off-balance-sheet debt faced by local governments, and ongoing trade tensions with the US.

While Xi acknowledged that his country faced “more severe” economic challenges at home and overseas, he also insisted that the Chinese Communist Party’s strategies were “completely correct,” The Wall Street Journal reported.

Xi, pictured at Tuesday event, failed to mention any concrete or specific plans for his country’s economy.
Jason Lee/Reuters

“Long on rhetoric and short on details”

Investors had been watching Xi’s speech for hints on how he would deal with China’s domestic economy, none of which came.

Tom Rafferty, the chief China analyst at the Economist Intelligence Unit, warned of “a sense of disappointment” over the speech and said it was “unlikely to galvanize financial markets.”

He said in a statement sent to Business Insider: “For a set note speech aimed primarily at a domestic audience, Xi was perhaps unsurprisingly long on rhetoric and short on details.”

He added: “There will be a sense of disappointment, among both local and international investors, that Xi did not give clearer signals about the direction of future economic reform at a time when the Chinese government’s commitment to market liberalization is seen to have waned.”

Xi’s speech marked 40 years since China’s opening up its economy to the rest of the world.
Reuters/Thomas Peter

“His speech also contained no fresh policy initiatives, in contrast to earlier speeches in 2018,” Rafferty said. “As such, it is unlikely to galvanize financial markets anxious about the trajectory of China’s economic growth and prospects for the US-China trade talks.”

Jasper Lawler, the head of research at the London Capital Group, also noted that Xi’s “failure to mention any new reforms or stimulus in a speech hailing China’ opening to the world, saw Asian markets hit their nadir.”

But Chi Lo, senior economist of Greater China at BNP Paribas Asset Management, warned investors ahead of the event not to expect any “dramatic announcement or surprise,” CNBC reported.

He said it was “the style of the Chinese government” not to make such statements, and that any market volatility could “hurt sentiment towards China.”

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