Market Extra: Markets on watch as China’s Party congress kicks off this weekend. What investors need to know.

by | Oct 14, 2022 | Stock Market

Investors have been battered by China’s economic slowdown, due in large part to a stubborn strain of COVID-19 that has rippled through the country this year which forced hundreds of millions of people into lockdowns, coupled with a debt-laden property sector, and a restrictive investment environment for foreign investors.  But investors may get some clues from the twice-a-decade Communist Party congress slated to start on Oct.16, where Xi Jinping, China’s top leader, is expected to secure his third five-year term as the president of the country and the chairman of the military.

The congress is set to present a road map for the next five years, including clues on how to spur a recovery in Chinese economic activity, signs of a meaningful pivot away from the zero-COVID approach, and plans to stabilize the embattled property sector. See: China president Xi Jinping is all but certain to be given a third five-year term as party leader at the end of party congress that opens Sunday In the past the congress has often reduced policy uncertainty and allowed Beijing to refocus on economic development, said Xiangrong Yu, China chief economist at Citi Research, in a note. The economic policy uncertainty index typically moderated after the leadership gathering except for the periods of the global financial crisis in 2008 and the U.S.-China trade war in 2018 (see chart below).

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