Overall Takeaways

  • Opportunities for foreign companies. Xi has further strengthened his grip on China’s three largest economic hubs – Shanghai, Beijing, and Guangdong – by elevating their party secretaries to the very core of party power. However, Xi insists China will further open its economy, which shows the party still accepts the need for foreign expertise to support high-quality development. We believe this means there will still be significant opportunities for foreign companies in the Chinese market.
  • Travel could be opening amid continued Covid restrictions. The elevation of the above party secretaries to the standing committee—all of whom have enforced rigorous pandemic restriction —implies China will continue to practice strict Covid policies that could impact the economy and business operations. That said, some easing for inbound travel could occur, facilitating person-to-person business and diplomatic exchanges.
  • Stated policy priorities and personnel appointments indicate China is prepared for a more confrontational relationship with the U.S. and its Western allies, particularly on hot button issues such as Taiwan. At the congress, the party adopted a passage to “resolutely oppose and contain Taiwan independence” – a longstanding position – into the party charter for the first time. 
  • In our view, China remains an important market for multinational corporations (MNCs) and a key player in the global economy. De-risking or significant pullbacks from the Chinese market are not necessarily the best strategy. China has over the past decade modernized its regulatory environment and established a better business environment for MNCs.
  • Economic growth remains a key policy priority for Xi and the new leadership in the coming years. The rapid digitization of the Chinese economy means many MNCs are taking their innovations in China into overseas markets. But they will find that more than ever they are caught in a tight spot between the West and China. Many Western analysts are also increasingly convinced a state of “economic warfare” between China and the U.S. (and some key European allies) is developing.