China Center Quick Note: Politics in Command - China after the 19th Party Congress

The 19th Party Congress and its subsequent 1st Plenum, which ran October 18-25, had been widely anticipated for nearly a year. While a party congress, held every five years since 1977, is always an important event in China, this year saw speculation reach a fever pitch. With the dust just now settling, we begin the difficult work of interpreting what actually transpired at the congress and what it means for foreign investors in China.

Looking forward, MNCs can expect an intensification of the key characteristics of Xi’s first term: a tight political environment, a strengthened state-sector under firm party control, increased regulatory attention to financial and environmental risks, a carefully guarded capital account, and a massive, state-led push into the strategic areas outlined in industrial plans like Made in China 2025. Predictable maladies with the new authoritarian orientation--and the inefficiency and innovation impediments it entails--define the needs foreign investors can address to create play space going forward.