🇨🇳😯 China Makes Unprecedented Political Decision
Happy Hump Day everyone,
In a more outward-looking Hump Days, we brief you on the China Communist Party’s decision to grant President Xi Jinping an unprecedented third term and what this means for the rest of the world. It’s easy to get caught up in matters that we face domestically, but this recent decision is not something to be brushed over as we could very well see the effects stateside relatively soon.
Let’s get to business.
Enjoy this week’s Hump Days!
- Humphrey, Rickie & Tim
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While much of the focus in the U.S. has been centered around the upcoming midterm election, high inflation, and high gas prices, 6,060 miles away, the biggest political event of the year is happening in Beijing, China.
An assembly of 2,300 delegates from around China assembled in Tiananmen Square’s Great Hall of the People beginning on October 16th for the Chinese Communist Party’s (CCP) week-long Party Congress. President Xi Jinping, who already has more personal power over China than any leader since Mao Zedong, is expected to be confirmed to serve an unprecedented third term. The stakes of what happens during this Congress for China and the rest of the world are incredibly high. Let’s dive further.
Historically, the CCP’s leader would deliver a speech read at the opening of the congress, and the content of the speech would often materialize into important legislation that would change the Chinese economy. For example, in 2017, Xi Jinping warned that “housing is to be lived in, and not speculated on”, and a real estate crackdown ensued which resulted in home prices being in decline for the last year. Take a look below to see how bad it got.
This year’s speech from Xi seems to be more outward-looking, focusing on geopolitics and technological competition with the U.S. Xi seemed particularly angry with the U.S. government’s decision to restrict U.S. citizens from supporting the development or production of chips at some Chinese firms, resulting in many Chinese-Americans working in China’s tech sector potentially needing to quit their jobs.
With regards to Taiwan, Xi said that China “will not rule out the use of military force,” a phrase that did not appear in the 2017 speech. During Xi’s time in power, China has become more assertive of territorial claims in the East and South China seas, engaged in border skirmishes with India, and most notably, threatened to use force to bring Taiwan under its control. Additionally, China has become more nationalistic, authoritarian, and regressive; having engaged in what many critics have called genocide toward the Uyghurs and other Muslim ethnic groups.
The decision by the CCP to grant Xi a third term shows that they believe he is a dominant figure. His party is also suggesting that he may even stay in power until 2035, which is a benchmark they have included in their development plans. What this means for China’s relationship with the U.S. is yet to be seen but they made their intentions clear - or so it seems - and want to become more competitive as a global superpower for the foreseeable future.
Weekly News Roundup
Biden to Sell More Oil From Strategic Reserve to Keep Gas Prices in Check (WSJ)
As midterm elections near, the Biden administration is planning to sell more oil from the country’s strategic reserves - and is considering authorizing new sales this winter. The move comes days after OPEC+ agreed to output cuts (read last week’s Hump days) and Russian officials began threatening further supply cuts to strike back at Western sanctions.
China Abruptly Delays GDP Release During Communist Party Conference (WSJ)
A day before it was set to be released, China delayed the publication of its Q3 GDP data. The delayed release coincides with the Communist Party’s twice-a-decade congress which is set to grant President Xi Jinping an unprecedented third five-year term. Expectations were for GDP to grow 3.5% compared to a year earlier, quickening from the 0.4% expansion recorded in Q2 when Shanghai, the country’s most prosperous city, was locked down for two months.
Netflix Will Charge $6.99 a Month for an Ad-Supported Plan (CNBC)
Netflix will charge $6.99/mo for its new advertising-supported tier, which the company will roll out in the U.S. on Nov. 3. The “Basic with ads” tier will include 4-5 minutes of commercials each hour and won’t have downloading capabilities. After years of rejecting the concept of an ad-supported tier, Netflix caved in as subscriber growth has plateaued in recent quarters. Netflix shares are up 14% on earnings that posted better-than-expected results including the addition of 2.4M subscribers and optimism surrounding the new subscriber tier.
Charts of the Week
Over half of all working employees have considered working multiple jobs to pay their living expenses as inflation remains stubbornly high and real wages decline.
Working parents in particular have been hit the hardest. About 70% say their pay isn’t keeping up with rising expenses and a recent study found that the current spike in prices means it will now cost more than $300,000 to raise a child to age 17, up $26,000 since inflation took hold.