news 4 days ago

The Week Ahead: China's quinquennial party

Miami Herald — By Tom Hudson Miami Herald

Oct. 12-- Investors know it's important to pay attention to big-company quarterly financial reports, dozens of which will be released in the week ahead.

Bu those watching the markets should also follow the proceedings at the Communist Party of China's National Congress, which starts Wednesday at a beach resort east of Beijing. The outcome of the event, held only every five years, will have an impact on global markets and investors of all sizes.

In a highly orchestrated spectacle, strategies and tactical policies will be laid out, and what's discussed will likely further fortify President Xi Jinping's vision for the world's second-largest economy.

Xi is expected to be appointed for another five-year term and consolidate his hold on power by installing more loyalists within the inner circles of the Community Party. In his first five years, Xi has prioritized economic stability over financial reforms. His government spent $236 billion bailing out the stock market in 2015. Chinese stocks plunged that summer after a big run-up in stock prices fueled by borrowed money from Chinese banks.

That same summer, despite years of saying it wanted to move toward a more market-valued currency, the government devalued the yuan. That decision came after a drop in Chinese exporting. A weaker currency makes Chinese goods cheaper for international buyers, including the U.S.

Xi's actions hurt U.S. stock indices at the time, but markets have since recovered and gone on to set record highs. Still, how China manages slower growth and transitions to a consumer- and service-oriented economy will ripple through investor portfolios here at home.

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ABOUT THE WRITER

Financial journalist Tom Hudson hosts "The Sunshine Economy" on WLRN-FM in Miami, where he is the vice president of news. He is the former co-anchor and managing editor of "Nightly Business Report" on public television. Follow him on Twitter @HudsonsView.

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