October 30, 2017
The Rundown: Why China’s 19th Party Congress captured the eyes of the world
China’s ruling elite took centre stage at the 19th National Congress of the Communist Party of China, which began October 18th and ended October 24th. For a week, the world watched as President Xi Jinping outlined his vision for the country. Amongst the strong statements and nation-building rhetoric, he unveiled key decisions that will shape China’s world view, its relationship with the other leading nations and have a great impact on the country’s business environment.
Here are the 5 key takeaways from the National Congress:
1. Xi cemented his reputation as a powerful ruler
The Congress is being seen, in and outside of China, as a referendum on President Xi’s success in positioning himself as China’s unquestioned political supremo. The Party’s decision to write “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” into the Communist Party constitution, confirmed the President’s status as China’s most powerful ruler since Chairman Mao Zedong. This confidence was conveyed in the President’s speeches and we can expect to see an increasingly outward looking China trying to gain increasing influence and corporate growth on the international stage.
2. Belt and Road Initiative still the centerpiece of Xi’s globalization strategy
It is his most ambitious project, and President Xi emphasized that China will continue to push forward with investment in the Belt and Road Initiative. Countering sceptics, he has made it clear that the project will be more than a buzzword or a tool of political diplomacy. It will also be the central driver of China’s new economic growth and development. In addition to being a government-endorsed initiative that will facilitate the flow of capital and excess capacity out of China, the Belt and Road Initiative is being supported by dedicated funds such as the Silk Road Fund, which are directly focused on project financing. With China backing deals and investment, it will be easier to get foreign governments on board. This policy, if handled right, could prove to be President Xi’s most enduring and far-reaching legacy.
3. China will continue its trend of opening up
The most encouraging sign for business is that President Xi delivered the message that China will ease market access by further opening up service sectors and will protect the legitimate rights and interests of foreign investors. All businesses registered in China will be treated equally. This is not the first time that state leaders have expressed their determination to deploy foreign capital to advance China’s development, particularly in the area of technology. But it will again help to bolster the confidence of foreign investors at a time when the Chinese market is increasingly important to them.
4. Foreign businesses are being encouraged to work closely with China
Under the new regime, foreign companies are becoming more open to engaging with regulators to help shape the business and economic landscape in China. Multinational corporations are sending their executives to China to learn about the market and are more willing to participate in country-to-country politics. Though they are still not in the position to decide the new rules of play, but they are taking the right steps to work more closely with industry bodies on proposals to the government to influence changes.
5. China’s international standing has never been stronger
It is unclear how other countries will react to an increasingly confident, global and sophisticated China. Already we are seeing the UK, Europe and the U.S. considering how they approve acquisitions of local companies by Chinese buyers. Even if there is no immediate shift in policy or clampdown, we are likely to see a period of increased scrutiny that Chinese companies need to take into account when operating abroad. The flipside for Chinese companies of being more visible and engaged globally is that they will draw greater attention and interest, making it ever more important to build early support and a strong reputation internationally with the key audiences who matter.