The Chinese yuan is under pressure from current monetary policy, and the country's stocks have fallen to their lowest level since the height of the global financial crisis in 2008, serving as a sharp rebuke to President Xi Jinping.
The market's inconsistency after reshuffles, which underscored Xi's unquestioning power over the ruling party, indicates a deep frustration with the likely strengthening of current policies that rely on Covid Zero and state-owned companies. Shares of tech giants JD.com Inc, Meituan and Alibaba Group Holding Ltd. fell more than 10% as investors remain skeptical that Xi and his allies will seek to revive private enterprise.
Justin Tang, head of Asian research at United First Partners, said the market is expressing its concern about the election of a large number of Xi's supporters. It follows that his unfettered ability to pursue unfriendly policies toward the market is now only strengthened.
The addition of Covid Zero supporters to the Politburo Standing Committee reduces the likelihood of any early easing of Covid restrictions.
Duncan Wrigley, chief economist for China at Pantheon Macroeconomics Ltd, also commented on the situation. He stated that more centralized power increases the risk of establishing directive policies in the country.