I would like to create my first post in Value pickr forum with speculation on the news of house arrest of Xi Jinping in China. Though nothing confirmed news - no government officially claimed yet.
What stops us as investor from speculating on the impact of such political news to global economy/markets ?
I am only trying to analyze on the possible global market impact and no interest on the any political happenings otherwise.
So In my view, I foresee the situation as -
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It is only an internal communist matter, as no other major political party there in China
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Communists are trying to remediate many blunders or wrong decisions taken by Xi Jinping -
i) Complete lock down due to zero covid policy - impacted the economy badly. Factory shut down resulted global supply chain disruption
ii) Real estate market failure, property devaluation
iii) Bank failure to return investor deposit
iv) Taking hard step on public protest against bank’s failure to return deposits
v) Aggression with respect to relationship with other countries
vi) failure of aggressive BRI projects in economically weaker countries - weakening of Chinese economy.
vii) China’s ( communist party’s) image on rest world -
Moreover due to Xi Jinping’s aggressive policy, If china shows extreme aggression to Taiwan like Russia did on Ukraine, and Taiwan shows resistance (which will be most likely), common people fears of forcing them to join with army, which may be nightmare for them, as the same is happening with Russia. Hence reflect common people’s anger on the communist party.
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Hence party may not take any strong step against Xi Jinping (or may result political instability in china) as it may hamper communist’s image - may be Xi to be warned or may be forced to step down max. Because as I said it is internal communist party matter, and they want to improve image by cracking down issues so that they can be on power. Any wrong doing will be self-axed resulting communist loosing control.
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If Xi Jinping is warned or stepped down, it will be good for the global economy due to adverse impact happened on global economy including china for his above policies/decisions.
Please comment down your thoughts.
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