Speaker 1: Ten minutes here before the top of the hour. Our
Speaker 1: guest is Richard McGregor, senior fellow at the Lowe Institute,
Speaker 1: with us to talk a little bit more about the
Speaker 1: latest developments in China and this consolidation of power by
Speaker 1: Shi jun Ping. Richard, always great to have you on
Speaker 1: the program. You know, we have to ask a lot
Speaker 1: of the same questions in seemingly different ways. So let
Speaker 1: me flip this around a little bit. We we knew
Speaker 1: that Hi Jumping had amassed a lot of power in
Speaker 1: in China, and we've known that for the past many years.
Speaker 1: Is this almost more transparent? Now? What you see is
Speaker 1: what you get. All seven members of the Standing Committee
Speaker 1: the polit Bureau are she supporters, she loyalists and at
Speaker 1: least you know that's the case. Yeah, I mean that
Speaker 1: is certainly one way of looking at it. Um. You know,
Speaker 1: there's art of clarity from China in that respect. Art
Speaker 1: of clarity also Procejumping himself. He has a very specific
Speaker 1: and detailed policy program both at home and abroad, which
Speaker 1: he wants to execute in what he thinks are now
Speaker 1: more dangerous times. So he's going to rely on people
Speaker 1: who are utter loyalists to do that, I mean I
Speaker 1: should say that. I mean, in some respects we are
Speaker 1: treating these people who have been appointed to the polit
Speaker 1: Bureau Standing Committee as mere Cipher's for She. But they're
Speaker 1: not greenhorns, you know, they've all had massive jobs in
Speaker 1: the system for many, many years. But but they're all
Speaker 1: on the same page as well, so they're not appointed
Speaker 1: on competence alone. It's also loyalty. Is everyone really all
Speaker 1: on the same page though, I mean, there's definitely this
Speaker 1: facade of unity. But let's just take this, for example,
Speaker 1: that they had to rewrite the constitution to allow she
Speaker 1: to break term limits a unanimous vote in favor, two
Speaker 1: thousand two delegates all think it's a great idea. Really,
Speaker 1: is there really no dissent or is it just really
Speaker 1: well hidden? Well, certainly at the moment, at a moment
Speaker 1: like that and there's voting, that's not the time to
Speaker 1: express any descent at all. Um, the look that the
Speaker 1: system is opaque. Um. You know, one of the funny
Speaker 1: things leading up to this party Congress, when we're all
Speaker 1: trying to discern what might happen, you know, one of
Speaker 1: the prime analytical tools for working, you know, following elite
Speaker 1: politics in China, and of course it's elite politics. Was
Speaker 1: only the elite can practice it, you know, was you know,
Speaker 1: we look at people's birthdays, how old are they and
Speaker 1: the line we used to look at people's factions. Now
Speaker 1: that's gone, age retirement limits has gone, no succession planning
Speaker 1: and the like. So of course there's disagreements are within China,
Speaker 1: and there's disagreements within execution, but we don't have any
Speaker 1: insight into that because at the top it is pretty
Speaker 1: much a black box. Now will it remain like that
Speaker 1: for the next five years? In other words, everybody marching
Speaker 1: in lockstep. I doubt that's true. There's too many pressures
Speaker 1: in the system, but it's not clear easily clear to
Speaker 1: us outside. Thus I think we have to say probably
Speaker 1: that in this next period it may not be as
Speaker 1: friendly to outside investors as what we had been led
Speaker 1: to believe. You know, in terms of pushback, I'm not
Speaker 1: saying that Lee Ka cheongg you know, was was giving
Speaker 1: huge pushback, but both he and Leo Hubb were seemingly
Speaker 1: preaching a slightly more moderate model for investors. You remember,
Speaker 1: back in March, we saw what looked like a promise
Speaker 1: for more transparency, and and that got swept swept to
Speaker 1: the side, and in fact now it looks like it's
Speaker 1: almost a mini purge up there at the top. So
Speaker 1: is it at least safe to say the atmosphere for
Speaker 1: investing is not so safe going forward as it was. Well,
Speaker 1: that's an interesting question because I certainly think at the
Speaker 1: local level of provincial city and even a lower level
Speaker 1: of governments, they're very keen on foreign investment, um, particularly
Speaker 1: as the other drivers of the Chinese economy are not
Speaker 1: working so well. Um. So there's two issues. Are foreign
Speaker 1: investors are less welcome I don't think so. Are there
Speaker 1: investments less safe because of growing gear political issues. That's
Speaker 1: quite possible, I would say, but then they're on the horizon,
Speaker 1: but not right in front of us at the moment.
Speaker 1: I really think the biggest issue for everybody is COVID zero,
Speaker 1: because the policy was reaffirmed quite strongly by C. Jimping.
Speaker 1: You would expect that, but he did it anyway, and
Speaker 1: I think that's really crushing the economy in China and
Speaker 1: making it difficult for Chinese investors as much as foreign investors.
Speaker 1: Until we can see our way clear of that, then
Speaker 1: I don't really see how it's friendly to any sort
Speaker 1: of investment at all. Yeah, and other potential risks around
Speaker 1: that too. In terms of dissent, because you know, we've
Speaker 1: got COVID zero, we saw signs of graffiti emerging and
Speaker 1: power the restrooms. I mean, it sounds trivial, but that's
Speaker 1: really the only place that people can express opinions now
Speaker 1: because there's no surveillance in a public restroom. So some
Speaker 1: of these expressions of frustration with COVID zero. Is there
Speaker 1: any risk that this bubbles up if it continues for
Speaker 1: much longer, Well, that there has to be, but I
Speaker 1: don't want to exaggerate that, because you know, we see
Speaker 1: a lot of stuff on Twitter and the like of
Speaker 1: this sort of descent, people getting angry the latest lockdown.
Speaker 1: Who wouldn't for example. But if you talk to other
Speaker 1: people in China, they say that there's still a lot
Speaker 1: of support for COVID zero because they buy the government
Speaker 1: line that the Chinese government policy has actually protected the
Speaker 1: health of Chinese. So many million plus Americans have died.
Speaker 1: The official figures for deaths in China below six thousand. Now,
Speaker 1: don't no doubt that's an underestimate, but maybe not by
Speaker 1: too much and people seem to have accepted the trade off.
Speaker 1: Now I wonder how much longer that lasts actually, because
Speaker 1: if the economy does continue to perform in a really
Speaker 1: sub half fashion, that will flow onto incomes and create
Speaker 1: other pressures. So we haven't seen that the scent yet.
Speaker 1: Just finally on that point, of course, China has its
Speaker 1: own sort of mini doctor Fauci's medical professionals who have
Speaker 1: the status and standing to speak up a little bit
Speaker 1: independently and periodically. They've been making their voices voice known
Speaker 1: on this issue as well, So I'm watching out for
Speaker 1: that as well. So we've seen a big cell down
Speaker 1: in Chinese equities, and bind flows have have kind of stabilized,
Speaker 1: but but they have been down. Are you are you
Speaker 1: thinking that maybe domestic investors will ultimately be the winners
Speaker 1: here because a lot of foreigners have backed away, but locals,
Speaker 1: you know, may take advantage of these better prices. Well,
Speaker 1: I'm very careful about commenting on markets and stock markets
Speaker 1: in particular, really also in China, but I don't think
Speaker 1: the markets in China are really that reflective of much
Speaker 1: other than confidence in the life um And so whether
Speaker 1: the domestic investors are all going to pile in now
Speaker 1: that the foreigners were out, and they'll win on the
Speaker 1: bounce back. Okay, tough to say. Richard out of time, unfortunately,
Speaker 1: Richard McGregor, senior fellow at the Lower Institute, with his
Speaker 1: live here