An economist has cast doubt on the commitment of Chinese leader Xi Jinping to market reforms.
Xi's name was enshrined in the Chinese constitution during the recent 19th Party Congress, making him the most powerful leader since Mao Zedong. However, there is no guarantee Xi will spend his political capital on economic liberalisation, argues Alex Wolf, senior emerging markets economist, Aberdeen Standard Investments.
“The optimistic view holds that with fewer political barriers, Xi will forge ahead with market reforms. Our view is less sanguine though, that Xi’s priorities are not liberalisation but rather a stronger state, a stronger party, and a more muscular foreign policy.”
Xi's policies tend towards more centralisation of power, he added, which could lead to “less local government reform experimentation and more centrally-directed policies”.
“This is dangerous for reform and productivity as traditionally the most effective reforms have started at the local level.”
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