Are we ready for a more powerful Xi Jinping?

China matters to us because it is the second largest economy in the world, but also because it is an unavoidable reference when we talk about the future of capitalism. The Chinese model is the most successful wealth creation “machine” in the history of mankind. Suffice it to say that in four decades it achieved what it took the United States between a century and a century and a half.

What will the next few years be like in China? This question brings Geopolitical experts and investors upside down. Xi Jinping’s confirmation for a third five-year term makes him the longest-serving Chinese leader since Mao Tse Tung. He is also the most powerful in the last five decades. The integration of a new leadership of the Chinese Communist Party composed only of people very close to Xi makes it clear to what extent the power of this 69-year-old man who has held the reins of China since 2012 has grown. he could remain in the center of power for several years, perhaps until his death.

The United States is concerned about China’s growing power and what it sees as an increasingly uncomfortable nationalism led by Xi Jinping. It is the desire to “reunify” Taiwan and its naval role in the South Pacific seas. It is also its growing presence in other areas of the world: Asia, Africa, Latin America. His rapprochement with Russia in the context of the invasion of Ukraine is another sign of estrangement from the powers of the West. A more assertive and rising China also worries other countries, in the foreground Japan, South Korea and Australia. They have been allies of the United States in the Asia Pacific since the middle of the last century. They have very important economic relations with China, through trade and investment. However, they cannot remain indifferent to the changes on the geopolitical chessboard in this region.

A third term of Xi Jinping represents political stability in China, but the markets, or rather investors, did not like it. The Golden Dragon index that brings together Chinese companies listed on the New York Stock Exchange has fallen almost 12% in the first two days of this week. There are companies like Alibaba, Tencent and Pinduoduo. This drop is the largest in history and reflects the fear of Chinese equity holders about what the relationship between the Chinese government and its big companies may be in the coming years.

The owners of these mega corporations grew in their fortunes until China became the second country with the most billionaires in the world, only after the United States. That did not seem to matter to Chinese political leaders, until five years ago. Xi Jinping’s second term marked a change of direction. Regulatory measures for large companies increased and a very clear message was issued from Beijing: Nothing and no one is above the Communist Party or the authorities of the Chinese Government. Jack Ma, the best-known Chinese billionaire in the West, owner of Alibaba, has gone from being a highly visible figure to a spectral presence. His luck changed after he dared to make very strong criticism of Chinese financial regulators. His project to list Ant, the financial arm of Alibaba, was stopped. It was too big to be tolerated by Beijing.

Xi Jinping’s next steps will be closely watched around the world. He has the challenge of relaunching the Chinese economy, which has been very difficult for three years. Furthermore, he leaves the experts with the task of observing and recording an Epoch Change that is happening in real time. What will the new balance between state and business in China look like and what implications will it have for the debate on the future of capitalism? What will be China’s next steps on its path to the top of the world economy? How will the United States react? What implications will this have for Mexico?

lmgonzalez@eleconomista.com.mx