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<br /> Since the time <keyword id="6354477" type="PERSON" weightage="80" keywordseo="Narendra-Modi">Narendra Modi</keyword> has taken over as the <keyword id="71" type="POSITION" weightage="80" keywordseo="Prime-Minister">Prime Minister</keyword> of the country, there is no doubt that <keyword id="3658" type="COUNTRY" weightage="80" keywordseo="India">India</keyword> has started walking on growth trajectory. Now, Indian and Chinese companies have signed agreements envisaging an investment of $2.5 billion during the visit of a Chinese delegation to the country.<br />
<br /> According to <keyword id="2615388" type="UNKNOWN" weightage="80" keywordseo="Xia-Baolong">Xia Baolong</keyword>, chairman of the <keyword id="2615805" type="UNKNOWN" weightage="80" keywordseo="Standing-Committee-of-Zhejiang-Provincial-People">Standing Committee of Zhejiang Provincial People</keyword>'s <keyword id="1575" type="ORGANIZATION" weightage="80" keywordseo="Congress">Congress</keyword>, "The visit of the Chinese delegation was very successful and agreements (MOUs) estimated at $2.5 billion were concluded between Chinese and Indian companies."<br />
<br /> On Wednesday, the high-level Chinese delegation met <keyword id="6355261" type="POSITION" weightage="80" keywordseo="Finance-minister">Finance Minister</keyword> <keyword id="42575" type="PERSON" weightage="80" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> to convey the interest of Chinese companies in the fields of <keyword id="34412" type="ORGANIZATION" weightage="80" keywordseo="economy">economy</keyword>, culture and tourism, among others.<br />
<br /> Jaitley, while welcoming the delegation, stressed upon the Government's promise to work towards expanding and deepening engagements and relations between India and <keyword id="1334" type="COUNTRY" weightage="80" keywordseo="China">China</keyword> based on common interests. The minister also highlighted the strategic significance of the two large countries with growing economies.<br />
(Image: Press Information Bureau)<br />

India, Chinese Companies Ink $2.5 billion Agreements

<ul class="generic-article__summary--ul content--ul"><li class="generic-article__summary--li content--li"><strong>The urban worker pension fund, the backbone of the country’s state pension system, is under threat, warns the Chinese Academy of Social Sciences</strong></li><li class="generic-article__summary--li content--li"><strong>Number of citizens exceeding the normal retirement age reached 249 million at the end of 2018, some 18 per cent of the total population</strong></li></ul>China’s main state pension fund will run out of money by 2035 due to a decline in the available work force, according to new research.<br /><br />The urban worker pension fund, the backbone of the country’s state pension system, held a reserve of 4.8 trillion yuan (US$714 billion) at the end of 2018. It is predicted to peak at 7 trillion yuan in 2027, then drop steadily to zero by 2035, a report by the World Social Security Centre at the government-supported Chinese Academy of Social Sciences has said.<br /><br />And the gap between contributions and outlays could be as high as 11 trillion yuan (US$1.64 trillion) by 2050, with each retired citizen supported by only one worker, down from the current level of two, the government think tank calculated.<br /><br />The report confirms long-standing concerns among the general public, especially among younger people, that China’s state pension system is financially unsustainable and highlights a major challenge for the government after four decades of restrictions on births.<br /><br />The number of mainland Chinese citizens older than 60, the normal retirement age at which men can claim pension benefits, reached 249 million at the end of 2018, some 18 per cent of the total population and close to three quarters of the population of the United States.<br /><br /><br />China’s efforts in recent years to increase the population have failed so far. <a href="https://www.scmp.com/economy/china-economy/article/2182963/chinas-birth-rate-falls-again-2018-producing-fewest-babies" class="link-text"><span class="text">Births in China</span></a><br /> fell to 15.23 million last year, the lowest since China relaxed its <keyword id="435124" type="PERSON" weightage="20" keywordseo="one-child-policy">one-child policy</keyword> in 2014 to allow couples to have a second child.<br /><br />China’s social security regulations require employers to pay up to 20 per cent of their employees’ salaries into the government pension fund, while employees are required to contribute 8 per cent of their wages. But while the contribution rates are mandatory, enforcement has been lax, with local governments allowing small businesses to pay less to ensure that they maintain high employment.<br /><br />Last year, Beijing announced it would take over collection of social taxes to ensure adequate contributions into the pension fund. However, the tougher policy was watered down almost immediately to help small business survive during the economic slowdown.<br /><br />China’s State Council announced last month that the employer pension contribution rate would be cut to 16 per cent as part of Beijing’s efforts to reduce the tax burden on businesses, though that move will cut income into the government pension funds.<br /><br />The combined level of local pension funds, managed by provincial and municipal authorities, was still positive last year, with incoming contributions exceeding pension payments. However, signs of stress have started to emerge, with some provinces already struggling to pay pensions.<br /><br />The central government created a special fund in July 2018 to shift pension funds from the richer coastal provinces like Guangdong and <keyword id="698896" type="ORGANIZATION" weightage="20" keywordseo="Zhejiang">Zhejiang</keyword>, where the working population is large, to pay pensioners in poorer provinces such Liaoning, where the number of retirees is large.<br /><br />Beijing is also mulling other measures to address the funding challenge, including extending the retirement age from the current 60 for men and 55 for women, but analysts argue it must make bold moves soon to avoid a crisis in coming years.<br /><br />Liu Xuezhi, a senior researcher with the Bank of Communications in <keyword id="6368000" type="LOCATION" weightage="20" keywordseo="shanghai">Shanghai</keyword>, said that the government should budget more funds for pensions rather than infrastructure projects. The government has budgeted 528.5 billion yuan (US$79 billion) to support social security payments this year, a rise of 9.4 per cent from a year earlier but a tiny amount compared to the country’s total pension expenditure.<br /><br />Wang Jun, the chief economist at Zhongyuan Bank, said Beijing’s decision to cut the corporate contribution rate for the pension fund is necessary to help the economy but that it should consider using other means, including the country’s US$3.1 trillion in foreign exchange reserves, to increase the available retirement funds while also asking state-owned firms to contribute larger portion of their profits to shore up the pension system.<br /><br />China’s urban worker pension fund was formed in 1997 when Beijing smashed the Soviet-style cradle-to-grave welfare system for state sector employees. Up to that point, employees working for state-owned enterprises, public servants and government officials did not make contributions to the pension fund.<br /><br />China’s current pay-as-you-go system relies on contributions from the current work force to pay current retirees. Those born in the late 1970s and the 1980s – the one-child generation – are now contributing a quarter of their salaries to the state-run funds but are the most likely to bear the brunt of necessary adjustments to pension benefits in the future.<br /><br />Yang Bing, a 41-year-old engineer in Beijing, said the pension funding shortage in the coming decades means he has to “work harder and save more”.<br /><br />“It’s better to prepare early by ourselves for the future rather than count on the government,” he said.<br />

China’s state pension fund to run dry by 2035 as workforce shrinks due to effects of one-child policy, says study

These are the 12 most powerful people in China you've probably never heard of

<ul class="summary-list"><li>Last month, Xi Jinping announced who would join him to be the top seven officials in China.</li><li>His new line-up is starkly different from the committee that ruled with him from 2017 to 2022.</li></ul><p>On October 23, President Xi Jinping revealed who would be China's men of power for the next five years.</p><p>As he <a href="https://www.youtube.com/watch?v=x2ZWiKQ5_O4&amp;ab_channel=CGTN">strode past a golden doorway</a> to meet the press at the Great Hall of the People, six officials trailed behind him in precise order: Li Qiang, Zhao Leji, Wang Huning, Cai Qi, Ding Xuexiang, and Li Xi.</p><p>The new line-up is a dramatic shift from the committee that ran China from 2017 to 2022. Only two of six previous Politburo Standing Committee members, Zhao and Wang, survived the transition. The other four reached retirement age or were sidelined.</p><div type="image" title="Xi Jinping unveils the other six members of the Politburo Standing Committee." height="4312" width="6468" msid="95376046" hostid="261" sizebytes="1018270"></div><p>Insider spoke to two experts to discuss the top three members of China's Politburo Standing Committee — Li, Wang, and Zhao — and what their appointments say about Xi's leadership style.</p><h2>Li Qiang, Xi's trusted aide</h2><div type="image" title="Li Qiang" height="3519" width="5074" msid="95376047" hostid="261" sizebytes="2621766"></div><p>Boosted to the second-in-command spot by Xi, Li is thought to be one of the president's closest protégés. He worked as the leader's chief of staff when Xi was running the province of Zhejiang from 2004 to 2007.</p><p>"Xi Jinping always utilizes his old people. People who have worked with him in Zhejiang and Fujian. That's Xi Jinping's style," Alfred Wu, an associate professor at the Lee Kuan Yew School of Public Policy at National University of Singapore, told Insider.</p><p>Li's appointment as No. 2 is perhaps the strongest indicator of Xi's grip on power. He wasn't even part of the previous seven-member committee, and had become deeply unpopular because of his haphazard handling of a <a href="https://www.insider.com/shanghai-lockdown-surreal-photos-ghost-town-amid-covid-lockdown-2022-4">two-month lockdown in Shanghai</a>.</p><p>"Lots of people speculated that Li will be demolished after the Shanghai lockdowns," said Wu. "But he is one of Xi Jinping's people. That message is so important."</p><p>"This shows clearly that Li has not taken the full blame and that it is not him who bore the responsibility for the implementation issues in Shanghai," Dylan Loh, a public policy and global affairs professor at Nanyang Technological University of Singapore, told Insider.</p><h2>Zhao Leji, the voice of the 'Shaanxi Gang'</h2><div type="image" title="An image of Chinese politician Zhao Leji" height="2722" width="4000" msid="95376048" hostid="261" sizebytes="177328"></div><p>Zhao was previously the head of Xi's powerful disciplinary committee, or the CCDI, a regulatory agency designed to crack down on widespread corruption among China's elite and the core of Xi's hallmark anti-corruption campaign. </p><p>It was during Zhao's tenure as the head of the CCDI that the agency started its stunning crackdown on big tech, a sector that had — until then — enjoyed rampant growth in China. </p><p>Having been the lowest-ranked member of the previous standing committee, Zhao has jumped four positions to get to his current role.</p><p>"Giving Zhao the third position might be an incentive or reward. It indicates to me that Xi Jinping is satisfied with the work that Zhao has done," said Loh.</p><p>However, Zhao was also known to have taken a "largely hands-off approach" during his time in office and didn't devote much time to investigations, <a href="https://www.wsj.com/articles/chinas-leaders-xi-jinping-and-his-men-11666538145">The Wall Street Journal's Chun Han Wong and Keith Zai wrote.</a></p><p>Wu believes Zhao's appointment had more to do with his relationship to Xi. He's part of the <a href="https://www.brookings.edu/wp-content/uploads/2016/06/Xi-Jinping-Inner-Circle.pdf">"Shaanxi Gang,"</a> a group of Communist Party leaders who are natives to Xi's home province, Shaanxi, and grew up with him.</p><p>According to analysts from the <a href="https://www.brookings.edu/wp-content/uploads/2022/10/20thpartycongress_zhao_leji.pdf">Brookings Institution</a>, Zhao is often considered a spokesperson for the Shaanxi Gang.</p><p>"That doesn't mean that Zhao was a childhood friend of Xi's. Other past powerful leaders have had more prominent relationships with Xi in his youth. But he's part of the club," Wu said.</p><h2><strong>Wang Huning, Xi's ideologist</strong></h2><p><strong></strong></p><div type="image" title="Wang Huning" height="2720" width="3924" msid="95376050" hostid="261" sizebytes="1872722"></div><p>Wang is known among Chinese scholars as a survivor, Wu said. Some compare him to a roly-poly toy, or a doll with a rounded-out bottom, because he hasn't fallen while serving China's last three regimes under Xi, Hu Jintao, and Jiang Zemin, the professor added.</p><p>Widely considered the brains behind Xi's policies and ideologies, Wang also helped Hu and Jiang craft their own political theories — an important mechanism that sets the tone for their administration's rule.</p><p>Wang has become "indispensable" to Xi because of his expertise in crafting political themes and slogans, which are vital to Xi's legitimacy in China, Loh said.</p><p>"Xi has increasingly turned to ideologies as a pillar of his rule," said Loh. "Mao resorted to violence, Deng Xiaoping resorted to money and growth."</p><p>"Violence is unthinkable nowadays, and money is a limited resource," the professor added.</p><p>In 1991, Wang published a book titled "America Against America," which documents his prediction of a decline in US dominance and stability because of the country's focus on "individualism, hedonism and democracy." </p><p>When the Capitol riot occurred last year, the book sold out on Chinese online marketplaces, <a href="https://www.bloomberg.com/news/articles/2021-01-13/a-2-500-book-on-u-s-decline-is-suddenly-a-must-read-in-china">Bloomberg reported.</a></p><p>Much of this is echoed in China's <a href="https://www.businessinsider.com/china-whole-process-democracy-expert-explainer-mind-game-2022-10">diplomatic and political rhetoric today</a>. But Wang also played a key role in creating the ideologies of Hu and Jiang, under which China enjoyed positive relations with the US and opened its economy more to Western trade.</p><h2>It's still Xi's China</h2><p>Even with Xi's new committee lined up, the world should expect little change coming from China's new leaders, both experts on Chinese politics said. With Xi still at the helm, differences in governing ideologies or economic policy held by his six committee members are now inconsequential, they said.</p><p>Wu said that Zhao may have helped craft and refine Xi's ideologies, but that their essence comes from the president, not his political theorist: "When the emperor has so many people serving his cause, the emperor must take full responsibility."</p><p>"Xi Jinping makes it very clear. He is the commander," Wu added. "But a top leader will never claim to be in charge of everything, because then you would also have to take responsibility for everything."</p>

Xi shook up the power order in China, but the world should expect little change — because Xi is still the complete puppet master, 2 experts say

<ul class="summary-list"><li><keyword id="11892748" type="UNKNOWN" weightage="60" keywordseo="china" source="Orion">China</keyword> last year punished 627,000 officials for "violating <keyword id="11897690" type="UNKNOWN" weightage="60" keywordseo="communist-party" source="Orion">Communist Party</keyword> discipline and laws."</li><li>Of this number, the majority of those disciplined were lower-level officials in farming communities.</li></ul><p>As Beijing faces the intense spotlight of hosting the 2022 Winter Olympics, China's Communist Party released a new report revealing it punished 627,000 officials last year for "violating Communist Party discipline and laws."</p><p>The CCP disciplined around 414,000 lower-level party officials working in farming and agriculture-level enterprises in 2021, per <a href="https://www.ccdi.gov.cn/toutiaon/202201/t20220121_166060.html">statistics</a> released by the Communist Party Central Commission for Discipline Inspection and the National Supervisory Commission last week. </p><p>According to the report, only 36 higher-level provincial party cadres and cabinet-level officials were involved in misconduct cases.</p><p>The number of Communist Party officials taken to task in 2021 slightly increased from the <a href="https://www.ccdi.gov.cn/toutiao/202101/t20210125_234753.html#:~:text=2020%E5%B9%B4%EF%BC%8C%E5%85%A8%E5%9B%BD%E7%BA%AA%E6%A3%80%E7%9B%91%E5%AF%9F,%E5%85%B6%E4%BB%96%E4%BA%BA%E5%91%9839.8%E4%B8%87%E4%BA%BA%E3%80%82">604,000 people disciplined in 2020</a>.</p><p>Communist Party members who are suspected of corruption-related crimes and lapses are referred to <a href="https://www.bbc.com/news/world-asia-pacific-13904439" target="_blank" rel="noopener">discipline inspection commissions</a>. These tribunals issue <a href="https://www.chinalawtranslate.com/en/2018-chinese-communist-party-disciplinary-regulations/#_Toc523131878">a gamut of disciplinary sanctions</a>, ranging from warnings and firings to expulsion from the Party. </p><p>Some notable instances of disciplinary action taken last year included punishments <a href="https://edition.cnn.com/2021/08/10/china/china-covid-officials-punished-intl-hnk/index.html">meted out to 47 officials across Zhangjiajie and Nanjing for their failure to control the outbreak of a cluster of COVID-19 Delta variant infections</a>. Officials in Xi'an are also <a href="https://www.theguardian.com/world/2021/dec/24/chinese-officials-face-punishment-over-covid-lockdown-in-xian">facing disciplinary action for "not doing a good job" to manage the COVID-19 outbreak there</a>, which <a href="https://www.insider.com/anger-erupts-over-hospital-system-failures-locked-down-xian-2022-1">led to the city's 13 million residents</a> enduring a multi-week lockdown.</p><p>Under Chinese leader <keyword id="11965076" type="UNKNOWN" weightage="60" keywordseo="xi-jinping" source="Orion">Xi Jinping</keyword>, China has been enacting clampdowns and disciplining officials in what it says is <a href="https://www.scmp.com/news/china/politics/article/3163863/xi-jinping-tells-disciplinary-watchdog-take-zero-tolerance">a drive to root out corruption in its government</a>. <a href="https://www.bbc.com/news/world-asia-china-37748241">In 2016</a>, the Chinese government announced that it had punished more than one million officials since 2013. </p><p>Such sweeping clampdowns on party officials are not likely to ease up. Last August, China's National People's Congress Standing Committee, the county's top legislative body, <a href="https://www.scmp.com/news/china/politics/article/3145845/china-moves-give-anti-corruption-inspectors-new-powers">passed a law</a> to give more power to local disciplinary inspectors looking into misconduct cases. This law allowed this corp of inspectors to file legal claims against anyone who might seek to obstruct their investigations.</p><p>Last week, the Communist Party's top disciplinary agency also <a href="https://www.globaltimes.cn/page/202201/1246524.shtml">vowed in a communique on its anti-corruption drive to show "no mercy</a>" to those who "try to build political gangs, 'small circles' and interest groups." </p>

China punished more than 600,000 officials in 2021 amid Xi Jinping's clampdown on corruption and misconduct

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Thomas Peter/Reuters</span></p><p class="caption">Souvenirs featuring portraits of China's late Chairman Mao Zedong and China's President Xi Jinping are seen at a shop near the Forbidden City in Beijing, China, September 9, 2016.</p></div><p></p></div></div>On Thursday, the Chinese Communist Party elevated General Secretary Xi Jinping to the "<a href="http://news.xinhuanet.com/english/2016-10/28/c_135788326.htm">core</a>" of its leadership, making him even more powerful in the run-up to the 19th National Congress.</p><p><span>The announcement came after the end of the Sixth Plenum, a meeting of 400 top party leaders to discuss changes in the party.</span></p><p>The move places Xi on par with previous strongman leaders such as Mao Zedong, Deng Xiaoping, and Jiang Zemin, and is a change-up from the consensus-style leadership of recent years. </p><p>Or, as <span>Christopher K. Johnson, an expert on Chinese <keyword id="6358883" type="PERSON" weightage="60" keywordseo="Politics">politics</keyword> at the Center for Strategic and International Studies in Washington told <a href="http://www.nytimes.com/2016/10/28/world/asia/xi-jinping-china.html">The New York Times' Chris Buckley</a>, i<span>t "confirms that he is no first among equals, but just first."</span></span></p><p><span>It's notable that </span>Xi has been elevated to "core" in the run-up to <span>the party's </span><a href="https://en.wikipedia.org/wiki/19th_National_Congress_of_the_Communist_Party_of_China">19th National Congress</a>, which will take place in autumn 2017. Then, 11 seats of the 25 member Politburo will open up, including<span> f</span><span>ive of the seven-member </span><a href="https://en.wikipedia.org/wiki/Politburo_Standing_Committee_of_the_Communist_Party_of_China">Politburo Standing Committee</a><span>, essentially the party's top leadership.</span> T<span>he two not retiring are Xi and </span><span>Premier Li Keqiang.</span></p><p><span><span>"<span>We believe that Xi's elevated status and growing reputation as the most powerful leader since Deng Xiaoping will increase his chances of appointing his own people to the Standing Committee,</span><span>" the analysts at BMI Research wrote.</span></span></span></p><p>However, Xi's stronger political posture "<span>also means that he will likely become more accountable with regard to the performance of the mainland economy</span><span>," they added.</span></p><p>Interestingly, a handful of provincial party heads started using "core" to describe Xi slightly <a href="http://www.businessinsider.com/afp-china-communist-party-declares-xi-jinping-core-leader-2016-10">less than a year</a> ago. But, as the <a href="https://www.ft.com/content/3b7d494e-9c03-11e6-a6e4-8b8e77dd083a">Financial Times' Lucy Honry reported</a>, "<span>the designation was pointedly not repeated at the time by [Xi's]</span><span> most senior colleagues, the six other members of the Politburo Standing Committee" and "</span>it prompted unusually public opposition." </p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/liz-ann-sonders-markets-reaction-election-economy-trump-clinton-2016-10">LIZ ANN SONDERS: The most unsettling outcome for the markets would be a surprise Trump win</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="czY2RrNjE6g23Q0yzCUBNysuCleRsdVF" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Xi Jinping's new political status puts him on par with Mao Zedong

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Aly Song/Reuters</span></p><p class="caption">Attendees listen to a speech by China's President Xi Jinping shown on a screen during the opening ceremony of the third annual World Internet Conference in Wuzhen town of Jiaxing, Zhejiang province, China November 16, 2016.</p></div><p></p></div></div>2017 is a big year for the Chinese Communist Party.</p><p>Next autumn, the party will host the 19th National Congress, which will likely determine the top leadership and set up the country's political future.</p><p>At the same time, China could be looking at an increasingly uncertain international situation in light of Donald Trump's November election.</p><p>And this two-pronged political environment could have implications for the party's economic policy in the near-term.</p><p>"...the Chinese leadership will likely face significant political uncertainty both internally and externally, and in response they will likely place social and economic stability as a top priority throughout 2017," a Credit Suisse research team led by Vincent Chan argued in a note. "We believe the government will adopt pro-growth measures to boost economic growth ahead of the political transition."</p><p>In other words, <span>as both the domestic and international political situations grow more uncertain, </span>the party might try to push forward some short-term growth initiatives.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Jason Lee/Reuters</span></p><p class="caption"> China's President Xi Jinping delivers a speech at a conference commemorating the 150th birth anniversary of Sun Yat-Sen, widely recognized as the father of modern China, at the Great Hall of the People in Beijing, China, November 11, 2016. </p></div><p></p></div></div></p><h3><keyword id="6358883" type="PERSON" weightage="60" keywordseo="Politics">Politics</keyword>, politics, politics</h3><p>On the domestic front, <span>11 seats of the 25 member Politburo will open up at the 19th National Congress. Five of those seats will be from the seven-member <a href="https://en.wikipedia.org/wiki/Politburo_Standing_Committee_of_the_Communist_Party_of_China">Politburo Standing Committee</a><span>, which is essentially the party's top leadership. The only two not retiring in that group are President Xi Jinping and Premier Li Keqiang.</span></span></p><p>The National Congress "goes a long way in deciding the top leadership around President Xi Jinping and how far he could consolidate his power, and potentially creates conditions for him to extend his rule in China beyond 2022 (his scheduled retirement date)," wrote Chan. "This meeting could decide China's political landscape during the next decade."</p><p>Notably, Xi was named t<span>he "</span><a href="http://www.businessinsider.com/chinas-xi-jinping-now-core-leader-of-communist-party-2016-10">core</a><span>" leader of the party back in late October. Analysts at BMI Research argued at the time that this increases the chances that he would appoint "his own people" to the Standing Committee. Moreover, they added that </span>Xi's stronger political posture also suggests that he will become more accountable for the economy's performance.</p><p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span><a href="http://pictures.reuters.com/archive/USA-TRUMP--RC1A7BD0A0A0.html">Shannon Stapleton/Reuters</a></span></p><p class="caption">Donald Trump</p></div><p></p></div></div>As for Trump, the president-elect has already increased the uncertainty with respect to the US-China relationship after he spoke with <span>Taiwan's president by phone in <a href="http://www.businessinsider.com/trump-phone-call-to-taiwan-likely-to-infuriate-china-2016-12">early December</a>. </span></p><p><span>That was<span> the first time a US president has directly spoken with Taiwan's leadership in over 30 years.</span></span></p><p><span><span><span><span>The call "</span></span></span></span>indicates to us that the new president may not follow the bipartisan consensus in last few decades in dealing with China<span><span><span><span>," wrote Chan and his team. And that "</span></span></span></span>means that apart from internal politics, the Chinese leadership will likely also need to deal with a highly uncertain external political environment in 2017."</p><h3>As for China's economic landscape...</h3><p>Against the backdrop of all this, China is facing a plethora of structural obstacles as it aims to transition its economy into one that is consumer based from one that depends on exports and investment.</p><p>The team at BMI research argued in a note on Tuesday that these reforms could "proceed at a smoother pace" given that Xi's new position as the "core" of the party "<span>will be positive for the centralization of power in Beijing as the president strengthens his grip over the party."</span></p><p><span>"That said, reforms to reduce the dominance of state-owned enterprises (SOEs) are still likely to remain slow," they added. "<span>The central government will still need to take the social impact (notably unemployment) of these reforms into account, and it also is keen to maintain its control over these SOEs, and as such, their full scale privatization is unlikely."</span></span></p><p>In any case, China's politics and economics will be something to watch going into the new year.</p>     <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/fed-federal-reserve-raised-rates-janet-yellen-explain-why-2016-12">Watch Yellen explain why the Federal Reserve decides to raise rates</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="9iN245ODE6FzNRBdC0_U12Pgj2-fdpNL" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

2017 is going to be stacked for China, and Trump isn't even the half of it

<p><div class="KonaFilter image-container float_right"><div class="image on-image"><p class="source"><span>REUTERS/Carlos Barria</span></p></div><p></p></div>China has investigated <a href="http://www.businessinsider.com/r-china-probes-more-than-25000-people-for-graft-in-first-half-of-year-2014-25">over 25,000 people for corruption</a> in the first six months of 2014. Probes into major cases were up 14% year-over-year.</p>
<p><a href="http://news.xinhuanet.com/english/china/2014-01/14/c_133044810.htm">182,000 officials were punished</a> by discipline inspection agencies in 2013, up 13.3% year-over-year.</p>
<p>Remember, Chinese president Xi Jinping came to power on the back of a very ominous message from his predecessor. In late 2012, outgoing president Hu Jintao <a href="http://www.businessinsider.com/hu-jintaos-speech-highlights-economy-corruption-2012-11">warned </a>that corruption could prove "fatal" to the Chinese Communist party, and even "cause the collapse of the party and the fall of the state."</p>
<p>Xi, who has been described as "redder than red" took that message to heart. Under his watchful eye, China's anti-graft campaign has gathered steam.</p>
<p>At first we saw an austerity campaign that warned against lavish gift giving and wasteful consumption. Soon that spread to the takedown of corrupt officials in the Chinese communist party, though some would argue that the seeds of this were sown in the downfall of former Chongqing leader Bo Xilai.</p>
<p>Now, government officials have caps on daily spending when traveling around China. The Chinese military has been banned from buying foreign-made vehicles. The State Council is widening its probe into the use of public funds for travel, gifts etc among military officials. And officials have become nervous about being caught <a href="http://www.businessinsider.com/chinese-officials-afraid-to-play-golf-2014-6">playing golf</a>.</p>
<p>Talking about the scope of this campaign in 2013, <a href="http://www.reuters.com/article/2013/01/22/us-china-corruption-xi-idUSBRE90L0AA20130122">Xi said</a>,"we must uphold the fighting of tigers and flies at the same time, resolutely investigating law-breaking cases of leading officials and also earnestly resolving the unhealthy tendencies and corruption problems which happen all around people."<strong><br /></strong></p>
<h3><strong>The tigers and flies</strong></h3>
<p>Zhou Zhenhong, former member of the Standing Committee of the Guangdong Provincial Committee and former head of the United Front Work Department, was <a href="http://www.scmp.com/news/china/article/1437111/senior-guangdong-official-zhou-zhenhong-sentenced-death-graft">sentenced to death</a> with a two-year reprieve. Zhou, a "tiger" was found guilty of <a href="http://www.chinadaily.com.cn/china/2014-01/24/content_17254882.htm">accepting $4 million in bribes</a> and failing to account for about $6 million in assets. Zhou first came under the scanner in 2012. </p>
<p>Last year, Liu Tienan, former deputy head of the National Development and Reform Commission (NDRC) was <a href="http://www.scmp.com/news/china/article/1295287/former-senior-official-liu-tienan-be-prosecuted-graft">expelled from the Communist Party</a> after being accused of corruption. Liu was one of the first tigers to be caught in the anti-graft sweep across China, based on accusations made online. </p>
<p>Liu Zhijun, former railways minister was given a suspended death sentence for corruption and abuse of power. Su Rong, former party chief for Gansu, Qinghai and Jiangxi Province before moving to the CPPCC, and a "tiger" was under suspicion for violating party rules and state law.</p>
<p>The latest to be ensnared in the crackdown is Rui Chenggang, a host on China Central Television (CCTV) and in the bigger scheme of things a fly. <a href="http://english.caixin.com/2014-07-14/100703599.html?utm_source=The+Sinocism+China+Newsletter&amp;utm_campaign=754b729af6-Sinocism07_15_14&amp;utm_medium=email&amp;utm_term=0_171f237867-754b729af6-24573061&amp;mc_cid=754b729af6&amp;mc_eid=743b9e45b4">Caixin Online reported</a> that he was detained shortly before his program aired on July 11. Li Yong at CCTV2 was also detained. The probe has also extended to other television executives like Guo Zhenxi, director of CCTV2.</p>
<p>And now the campaign is shifting gears to focus on "naked officials," those with immediate families that live abroad. Over a thousand naked officials were found in Guangdong province in June, with 200 of those officials asking their families to return home and 866 agreeing to demotions.</p>
<p><strong>Xi's Consolidation Of Power</strong></p>
<p>But there are two names that truly stand out. First, is <a href="http://www.bbc.com/news/world-asia-china-28305134">Zhou Yongkang</a>, a former Politburo Standing Committee member, is said be under investigation and so are three officials linked to him, Li Dongsheng, Jiang Jiemin, and Wang Yongchun.</p>
<p>Of course for Xi the one happy coincidence to this corruption purge, is that it helps him knock off some of his rivals. "Power consolidation is of course very important and we should consider the ongoing investigation into Zhou Yongkang and his allies at least in part in that light," Bill Bishop author of Sinocism told Business Insider. </p>
<p>"There is little doubt these people were engaged in remarkable amounts of corruption, and there are all sorts of unproven rumors about plots and deals among this group in the runup up to the 2012 18th Party Congress, but taking down this network has also allowed Xi to gain control over the security services, and much faster than most observers expected."</p>
<p>"The other vital source of hard power is of course the military," explained Bishop, enter:  <a href="http://www.nytimes.com/2014/07/01/world/asia/china-moves-against-one-of-its-top-leaders.html?_r=0">Xu Caihou</a>, who once held one of the highest positions in the People's Liberation Army (PLA) and was a member of the Politburo. Xu was expelled from the Party and handed over to prosecutors for accepting bribes. This of course is a further sign of Xi consolidating power over the PLA.</p>
<p>Jim Chanos sees the corruption drive as a much more serious effort to "cleanse the party." Speaking on  <a href="http://www.businessinsider.com/jim-chanos-on-china-anti-corruption-2014-7">Bloomberg TV's Charlie Rose Show</a> he said, "If you look at the people's daily overnight announcements - I mean, there is four or five headshots put up on Twitter and on their website, of people who have been taken away every night. I mean it's almost as if you're seeing a Soviet-style 1930s purge through a social media."</p>
<p>Some argue that this makes Xi more <a href="http://www.businessinsider.com/xi-jinping-reminiscent-of-deng-not-mao-2013-11">a Maoist, than a Dengist</a>, with reference to Deng Xiaoping, China's paramount leader from 1978 until his death in 1997. But some argue he's neither.</p>
<p>"I see Xi Jinping more as a Machiavellian than a Maoist," Arthur Dong, professor of strategy and economics at Georgetown University told Business Insider. "The ends that Xi Jinping and his reform minded coalition wish to pursue relate to the long-term viability of the Communist Party."</p>
<p>"Institutional weakness as a result of endemic corruption on the part of government administrators has been a recurring feature of China's past and one of the driving forces that led to the end of the dynastic cycle.  President Xi knows that for the Party to survive it must maintain its legitimacy," he explained. "Invariably, some of the accused represent views that come to differ with Xi's. Their removal also presents the opportunity to remove a political rival. It is a messy game that Xi has so far been very adept at playing."</p>
<p>"It is a mistake however, to conclude that it is just about reshuffling officials so Xi can put his people in place," Bill Bishop author of Sinocism told Business Insider in an email interview. </p>
<p>"I believe that Xi is serious about improving governance and cleaning up at least the more egregious corruption in both the Party-state and the military," Bishop said. "I think the anti-corruption efforts are also clearly about reining in and in some cases removing special interests that are resisting the very ambitious reform plans passed at the Third Plenum of the 18th Party Congress in November 2013."</p>
<h3><strong><div class="KonaFilter image-container float_right click-to-enlarge"><div class="image"><a title_source="Bank of America" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/53adf6026bb3f7222c83b203-960/screen shot 2014-06-27 at 6.52.19 pm.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Bank of America</span></p></div><p></p></div>The Economic Impact</strong></h3>
<p>There is however a snag to the anti-graft campaign. Unlike other countries, in the short-run, cracking down on corruption actually hurts growth in China, according to Alastair Chan at Moody's. </p>
<p>The austerity campaign that we saw in real force in 2013, deterred conspicuous consumption and lavish gift giving. At the time, it hurt sales of luxury goods, catering at high-end restaurants, and wasteful construction of government buildings. Top-end restaurant sales were down 35% YoY in 2013.</p>
<p>Now Bank of America's Ting Lu believes that corruption is going to start impacting fixed asset investment (FAI). "Even for the honest officials, the escalated anti-graft campaign is making them think twice before making investment decisions," wrote Ting. </p>
<p>"The officials are increasingly cautious as they don't want to be the next target of the campaign for the actions they have taken. Many feel the safest way during the heightened crackdown is to do nothing. This is part of the reason that Premier Li has repeatedly called for more action at local levels since May."</p>
<p>Ting points to "the abnormally high growth in bank deposits of governments and quasi-government agencies (up 28.3% and 23.6% yoy in February 2014 respectively),"  the slowdown in retail sales and FAI growth as factors weighing on the Chinese economy.</p>
<p>Of course, Xi is aware that he can't terminate the campaign at this point. In fact economists expect it to continue for another two or three years. Moving forward Beijing is left with a tough choice between the social benefits of lower corruption or economic growth.</p>

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