China Succession Intrigues (FXI, FXP, EEM, VWO, TAO)

Jim Trippon: US China watchers are eager to gauge the presumed next leader of China, Vice-President Xi Jinping, when he visits the White House next month. The visit, announced by the White House though unconfirmed by the Chinese Foreign Ministry, is reportedly set for February 14. Vice-President Joe Biden will host the Chinese vice-president. Xi, China’s most likely next leader of its government, is part of the overall succession planned by China’s current leaders to deliver what they hope is a smooth transition into its next era.

Speculation for some time has been that Xi has been the choice to succeed President Hu Jintao in early 2013. In addition to a visit by US Vice-President Biden to Beijing last August where he met with Xi, this trip to the US is seen by observers as a strong signal which further confirms Xi as China’s choice for successor.

Vice-President Xi Jinping

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Who Xi Is

Xi is the son of former Vice-Premier Xi Zhongxun, who was known as a reformer. Although Xi apparently stands on the brink of ascending to China’s highest position of leadership, he was not well known outside of China until the last few years. This despite growing up with the pedigree of a family whose leadership prominence dates back to the early years of Communist China and the Mao Zedung era. The current president of China, Hu Jintao, by contrast had served in high level party and government positions more extensively prior to his elevation as China’s leader, so was more widely known.

A Formidable Task

When Xi succeeds Hu Jintao, as all signals suggest will happen, he inherits not only the leadership of the Communist Party and the presidency of the country shortly after, but he also inherits a country which is changing in some ways at the speed of light. Barely three decades into its plan to take its place in the modern world via vast reform of its economy, China is also growing into a position of political prominence on the world stage, with a new set of responsibilities, challenges, and potential conflicts.

Trade and currency issues with the US are well known, but China must also balance its complex alliances and international affairs with attending to its own domestic economic and social issues. China has grown spectacularly in three decades, yet unevenly. There is a massive economy to manage, to iron out its still considerable wrinkles, while managing social change yet delivering a better life to a hugely populous nation.

Transitional Goals

While the Xi visit to the US likely has modest aspirations for both parties, one of continuing to keep lines of potential cooperation open in the face of some policy quarrels, the goals of China’s Communist Party central committee are no doubt ambitious for succession. Hu Jintao forged a steady path, part of the legacy of which should be smooth transition. This was hardly the norm prior to Hu’s ascension to power. Cautious, careful and slow reforms were reinforced under Hu’s leadership.

While this path may have been too slow for some critics within and without China, some westerners who see a danger of China slipping back into pre-Hu days, with reforms more problematic, are discounting that most of China’s recent leadership has avoided this hardline. Predictions about what type of leader Xi will be are speculation, but Xi’s speeches have hewn to the party line of slow, steady and smooth, to remain on course. No one knows what will unfold until Xi is established, but the likely goal of China’s leadership is to keep things going in the direction and speed Hu has fashioned.

China’s Vice-President Xi Jinping And US Vice-President Joe Biden Meet

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Maintaining Direction

When China observers watch for any signs of a change in direction of the central government, they should keep in mind that even though there are no doubt differing personalities, personal ambitions and governing philosophies among China’s ruling hierarchy, the economic and political direction of the People’s Republic of China in recent times has been fairly consistent in its broadest direction. China Daily USA revisited an important moment in China’s economic history in a recent article.

Back in 1992, according to the piece, as Deng Xiaoping continued to battle his critics more than a decade after putting China on a path to economic reform, he issued what amounted to a defiant proclamation and prediction. The man who once uttered, “To get rich is glorious!” as he set China on its historic course on which it continues today, challenged his critics. “Without reform,” he said,” there will be no hope for the country and the ruling party will perish.” He added, China must “gradually push for common prosperity.” This will likely be the path Xi and China takes.

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Written By Jim Trippon From Global Profits Alert

Jim Trippon, founder of Trippon Financial Media, Inc.,  is a maverick that has dedicated his investment career to helping  investors make smarter financial and stock selection decisions. Trippon,  an internationally recognized expert on global and value investing, has  a deep passion for finding hidden value in global equity markets.  Trippon started his career as a financial statement examiner with Price  Waterhouse which allows him to dissect a public company’s financial  picture and better identify hidden gems. Trippon’s savvy approach to  investing and personal finance makes him in high demand by major media  who seek his unique perspective on stocks and global economics. He has  been featured in top publications both in the US and abroad including  Bloomberg, Investor’s Business Daily, The New York Times, The  International Herald Tribune, Stock Futures and Options Magazine, The  Bull and Bear Financial Report and he regularly appears on broadcast  television including as an on air contributor to CNBC, CNN, Fox  Business, and Fox News.

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