Courtesy of Mish.
Here’s some interesting analysis from Steen Jakobsen, chief economist of Saxo Bank, regarding implications of China’s 3rd plenum.
Before presenting the viewpoint of Jakobsen, some readers may be wondering “What is the 3rd Plenum?”
Business Insider explains …
BI: What is the 3rd Plenum?
Bill Bishop: A Plenum is a meeting of the Communist Party’s Central Committee. This Central Committee has 205 full and 167 alternate members, chosen at the First Plenum of the 18th Party Congress in November 2012. Each Party Congress lasts for 5 years, and with the exception of the first year there is usually one Plenum held per year. The Politburo, comprised of 25 members, meets more regularly, and the Standing Committee, made up of 7 members, meets even more frequently. Xi Jinping is the General Secretary of the Party and also holds the top posts in the State (President) and Military (Chairman of the Central Military Commission)
Third Plenums are seen as important because the First Plenum introduces the new leadership, the Second Plenum tends to be personnel- and Party construction-focused, while the third one is usually seen as the first plenary session at which the new leadership has basically consolidated power and can introduce a broader economic and political blueprint.
BI: Why is it significant?
BB: Not all Third Plenums are that significant, and plenty of reforms have happened outside of a Third Plenum, But, the Third Plenum of the 11th Party Congress in December 1978, held just two years after the death of Chairman Mao, the end of the Cultural Revolution and the arrest of the gang of Four, launched “reform and opening” and put China on its current path.
Steen Jakobsen on 3rd Plenum Growth
3rd Plenum historically means SIGNIFICANTLY lower growth.
My take on politics remains the same: It’s about consolidating the party’s power not reform. They are increasing security and control at all levels. Do not forget the simple math of China. The local governments have 80% of all expenditure & expenses, but only 40% of tax receipts.
What now? Uniform sales tax? Yes…..but not reform in the western world meaning of the word.
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