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Wednesday, April 26, 2017

View of the Week: On #China

China is rising and continues inroads as The United States continues its' efforts to strengthen its' alliances as North Korea's threat looms large.    This "snapshot" courtesy of the Fortune CEO Daily Newsletter W-End Edition provided a good snapshot of the current state of affairs in China and potential looming challenges which our team chose for this edition of "View of the Week" as the New Week dawns.

We wish all a great week from our Hometown here in Laguna Niguel:


APRIL 22, 2017
Good afternoon.
Chinese president Xi Jinping is often portrayed in Western media as something of a control freak. The Economist last year proclaimed him “Chairman of Everything” (and was promptly banned in China). That image may be undeserved. But with the approach of a crucial Party Congress this fall, it’s not hard to understand why the Chinese leader would focus on order and stability.
The Party Congress, the 19th to be held since China’s Communist Party was founded in 1921, affords Xi a make-or-break opportunity to pack the party’s 350-member Central Committee with his own allies. He’ll also have a chance to promote his own people to two key sub-groups, the Politburo and the Politburo’s Standing Committee, as well as the army’s ruling council. Results of the reshuffle will determine whether Xi has enough support to extend his influence beyond 2022, when his term as party secretary is set to expire.
To achieve maximum influence at the Congress, Xi must preserve steady growth of China’s economy; project an image of strong leadership in global affairs, especially in China’s dealings with the United States; and enforce absolute loyalty within the party.
For now, most analysts seem to be betting that Xi will succeed on all three fronts. China’s GDP grew 6.9% in the first quarter, its strongest quarterly performance in 18 months. Meanwhile, Donald Trump’s vow to scrap or re-write long-standing U.S. trade agreements and scale back American security guarantees to traditional allies has enabled Xi to position himself as a champion of global cooperation. Xi’s first meeting with Trump, in Mar-a-Largo, Florida, ended amicably, and Trump quickly abandoned threats to declare China a currency manipulator and slap tariffs on imports from China.
But a lot can happen in a few months–and there are plenty of potential Black Swans out there. Many analysts warn China’s growth is the result of ballooning credit, not genuine consumer demand. Skeptics point to the recent collapse in the share price of Hong Kong-listed China Huishan Dairy and record bond defaults as signs of economic distress. Trump added to the uncertainty with his announcement Thursday that he is launching a trade probe against China and other exporters of cheap steel into the United States.
Meanwhile, allegations of corruption among senior party officials by Chinese tycoon Guo Wengui last week spiraled into a bizarre feud involving senior Chinese diplomats, an abruptly terminated interview with Voice of America, and a hail of counter-attacks in China’s state-owned media. The controversy stirred speculation among US China experts of serious behind-the-scenes turmoil in Chinese politics. Fortune‘s Scott Cendrowski has more background on the dust-up here.
Enjoy the weekend!
Clay Chandler

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