China’s leaders are about to test the promise that holds their country together

BusinessInsider/Linette Lopez/01-09-17

“In a closed-door meeting in December, Bloomberg reports, Chinese leaders came to the conclusion that piling on debt for short-term growth has become too dangerous. Now they will prioritize stability over growth and reform, and become more flexible about their target of 6.5% growth until 2020.

It seems they had little choice. Capital is leaving the country at a breathtaking rate. Last month, $82 billion left China despite tighter capital controls on individuals and corporations. That, combined with a strong dollar, is pushing the value of the yuan down to levels that are worrying leadership.”

PG View: If China’s growth rate continues to slow, as Xi Jinping continues to consolidate political power, a backlash of some sort becomes increasingly likely. One might also wonder what steps President Xi might take to avoid any such backlash.

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