When Chinese leader Xi Jinping secured a historic third term in power at the weekend and stacked his top team with loyalists in a clean sweep not seen since the Mao era, investors were quick to pass judgment.
Chinese stocks listed in Hong Kong and New York crashed on Monday, and the yuan hit its lowest level against the US dollar in nearly 15 years a day later. On offshore markets, the Chinese currency traded at its weakest point since data provider Refinitiv began keeping records in 2010.
Xi’s preference for personal loyalty over technocratic competence bodes ill for China’s already bleak economic outlook, analysts said. Replacing seasoned economic officials with people with much less experience also signals a more ideology-driven policy that could further dent private sector growth and worsen Beijing’s ties with the United States, they added.