Left to right: Mark Zuckerberg, Xi Jinping and Tim Cook

China will firmly stick to the basic national policy of opening-up and pursue win-win cooperation while safeguarding the country’s sovereignty, security and development interests, President Xi Jinping said while meeting with members of the Advisory Board of Tsinghua University School of Economics and Management. The President added that China is deepening overall reform with unprecedented determination and force. China has not only benefited from but also contributed to economic globalization, Xi said, adding that China’s
development means opportunities for the world. China will not seek to take advantage of other countries but will pursue win-win cooperation, Xi said, while pledging to take more measures to boost opening-up.

Board Members who participated in the meeting included Tim Cook (Apple), Mark Zuckerberg (Facebook), Robin Li (Baidu), Jack Ma (Alibaba), Pony Ma (Tencent), Elon Musk (Tesla) and Satya Nadella (Microsoft). Former Premier Zhu Rongji is Honorary Chairman of the Advisory Board.

Commenting on his upcoming meeting with U.S. President Donald Trump, Xi said China would like to make joint efforts with the U.S. to take each other’s interests and concerns into consideration, dissolve disputes and contradictions, and engage in win-win cooperation.

Mark Zuckerberg said that boosting connections will create economic opportunities, just like what the China-proposed Belt and Road Initiative has brought to the world. “We know that when it’s easier for businesses to connect their customers on the internet, that enables the creation of new entrepreneurship, innovation and development, and improves the life of everyone,” he told Xi, as reported by the China Daily.

China posted relatively solid economic growth of 6.8% in the third quarter, driven by a stronger services industry, although there were signs of weakness in real estate and construction as property cooling measures start to bite. China’s property sector grew 3.9% in the quarter from a year earlier, decelerating from 6.2% in the second quarter and the slowest pace in nearly two years, the National Bureau of Statistics (NBS) said.

Growth in construction activity slowed from 5.4% in the second quarter to 4%, the weakest expansion since the fourth quarter of 2000. Property and construction together account for 13.3% of the economy, with property alone directly impacting 40 other industries. Softening in those sectors appeared to be the main drag on the otherwise fairly resilient Chinese economy. Third-quarter growth eased only slightly to 6.8% from 6.9% in the previous quarter, as had been widely expected.

Analysts have long predicted a slowdown in the property sector and construction after city governments began rolling out measures from late last year to cool soaring home prices and deter speculators. Property sales dropped for the first time in more than 2½ years in September and housing starts slowed sharply.

China had posted forecast-beating growth in the first half of the year, led by a sharp turnaround in the long ailing industrial sector, which accounts for a third of the economy. A construction boom – fueled by the housing frenzy and government infrastructure spending – has spurred demand and prices of building materials, with the resulting return of factory gate inflation boosting earnings for China’s heavily indebted heavy industry. But industrial growth slowed to 6.3% in the third quarter, from 6.6% in the previous period and there is uncertainty about how “smokestack” industries will fare over the coming months as China implements drastic measures to reduce winter air pollution, the South China Morning Post reports.

Data also showed that total sales of consumer goods rose 10.4% year-on-year to CNY26.32 trillion in the first three quarters. The pace was unchanged compared with the same period of last year. The official Purchasing Managers’ Index (PMI) rose to 52.4, the highest this year. Growth of imports and exports both accelerated. China’s average per capita disposable income grew 9.1% year-on-year to CNY19,342 in the first three quarters, Fixed-asset investment expanded 7.5% in the first nine months, marking the slowest rate of growth since a 6.3% reading in December 1999.

Picture from a previous Party Congress, which is held every five years

Beijing is likely to increase its intervention in China’s economy after the 19th Communist Party Congress – which opens on October 18 – hampering any effort by U.S. President Donald Trump to wring substantial trade and investment concessions from China during his visit to the country in November, analysts say.

Scott Kennedy, a China expert at the Washington-based Center for Security and International Studies, told the South China Morning Post that rather than overall market liberalization, the Party Congress “is likely to be followed by even greater government and party intervention in industries and markets”. Beijing would make “modest, largely symbolic concessions” on some areas of market liberalization ahead of Trump’s visit, Kennedy said. But “China Incorporated is likely to get more support and made more powerful, not dismantled. Interventionism works and China has paid little diplomatic or economic price for it. So why not continue?,” he said.

Markus Rodlauer, Deputy Director of the International Monetary Fund’s Asia and the Pacific Department, told an Asia Society Policy Institute think tank event in Washington that he expected no overall economic policy changes to come out of China’s Party Congress, owing to the ruling elite’s desire for stability as leaders are reshuffled. “The reasonable expectation is that things won’t change dramatically,” Rodlauer said. The congress might provide “some clues” to possible policy changes, but no specific economic policies could be set until the Economic Work Conference in December and the National People’s Congress (NPC) session next March, the IMF official said.

Washington China-watchers have speculated about the extent to which China’s ruling elite will proceed with economic reform. Four years ago, at a Central Committee session of the 18th Party Congress, the leadership pledged to let markets play a “decisive” role in the economy and unveiled a comprehensive reform agenda towards achieving “decisive results” by 2020, but the outcome so far has disappointed U.S. observers.

“We have not seen the kind of overall economic reforms we are seeking,” said Erin Ennis, Vice President of the U.S.-China Business Council. “China is falling short of reforms for the benefits of foreign companies,” she told the Asia Society Policy Institute event. With a huge surplus on the government’s balance sheet, sufficient foreign reserves and liquidity in its banks, China still has “a very strong system even if they have problems,” Rodlauer said.

The IMF this week raised its 2017 and 2018 economic growth forecasts for China but warned that the nation’s long-term growing debt load raised the risks of a “sharp growth slowdown”. The IMF urged China to “de-emphasize near-term growth targets and focus on reforms that would enhance the sustainability of growth”, the South China Morning Post reports.

China’s producer prices rose 6.9% in September from a year earlier, beating market expectations of a rise of 6.3%, the same pace as in the previous month. China’s consumer price index (CPI) rose 1.6% in September on-year, in line with forecasts. “China’s economic growth has slowed over the past few years, but economic growth has rebounded this year, with GDP reaching 6.9% in the first half, and may achieve 7% in the second half,” People’s Bank of China Governor Zhou Xiaochuan told the G30 International Banking Seminar in Washington on October 15.

Profound, fundamental changes were made over the last five years indicating the nation’s development stands at a “new historical starting point,” according to the communique of the four-day Seventh Plenary Session of the 18th Central Committee of the Communist Party of China (CPC), published on October 13. The plenary meeting made final preparations for the 19th National Communist Party Congress.

Evergrande Group Chairman Xu Jiayin (No 1, left) and Alibaba Chief Executive Jack Ma (No 3, right)

A group of 2,130 Chinese individuals now have a combined fortune equivalent to the economy of the UK, according to the Hurun Report’s 2017 Rich List. At least 74 individuals joined the group with fortunes of at least USD300 million in this year’s list, adding to the 2,056 who made last year’s list, and bringing their combined assets to USD2.6 trillion. Xu Jiayin, Chairman of real estate developer Evergrande Group, has emerged as China’s richest man with assets worth USD43 billion. Last year’s leader, Wang Jianlin, dropped to fifth after declines in the share price of his embattled Wanda Group saw his family’s net worth slump 28% to USD23 billion.

Pony Ma, Founder and Chief Executive of Tencent took the No 2 spot on the rich list with a net worth of USD37 billion, overtaking Alibaba Chief Executive Jack Ma at USD30 billion, who ranked third. Fourth on the list, and also China’s richest woman, Yang Huiyan, Vice Chairman and the largest shareholder of real estate developer Country Garden, saw her wealth triple to USD24 billion. Aside from real estate, technology names continued to dominate the wealth rankings with Baidu’s Robin Li, and NetEase’s Ding Lei both making the top 10.

“Overall, the Hurun Rich List has grown faster than any year since 2007, with the possible exception of 2015,” said Rupert Hoogewerf, Hurun Report Chairman and Chief Researcher. “China’s entrepreneurs have come a long way. Back in 1999, when I put out the first list, I managed to rank 50 people. Today we have almost that number just from Alibaba,” said Hoogewerf. Of the 2,130 individuals with assets above USD300 million, 43 came from Alibaba and its affiliate Ant Financial, the South China Morning Post reports.

Alibaba briefly surpassed its U.S. counterpart Amazon as the world’s biggest e-commerce company as it reached a market capitalization of USD472.1 billion, while Amazon’s market value dropped to USD471.9 billion. As one of the top performers on the New York Stock Exchange, Alibaba’s stock has gained over 100% since January, while Amazon rose nearly 30%. Alibaba’s cloud computing business is also on track to surpassing Amazon Web Service (AWS) to become the world’s top provider of cloud services.

Dai Wei, 26, founder and CEO of bike sharing service provider Ofo, appears on the list for the first time with personal wealth of CNY3.5 billion. He is the youngest self-made entrepreneur in the 19-year history of Hurun Rich List. Li Bin, 43, who invested CNY1.5 million in Mobike, Ofo’s chief rival, in 2015, saw his wealth rise by 235% in the past 12 months to CNY6.7 billion.

Hoogewerf predicts those linked to companies specializing in artificial intelligence, driverless cars and biotech will be the next wave of additions.

China’s National Development and Reform Commission (NDRC), the country’s economic planning agency, said last week that the economy was under control and China’s 6.9% growth in the first half was of higher quality and efficiency. The economy was balancing out, with services and domestic demand taking over some of the growth slack from industrial production and exports, the NDRC added.

But just hours later S&P Global Ratings downgraded China’s sovereign rating for the first time since 1999 – from AA- to A+ – citing the country’s greater economic and financial risks. After “a prolonged period of strong credit growth”, S&P said, China’s credit growth in the next two to three years “will remain at levels that will increase financial risks gradually”. The Ministry of Finance promptly accused S&P of misreading China and ignoring its sound fundamentals and growth potential.

The contrast reignited debate over the fundamentals of China’s future – whether the country is leaping over the middle-income trap with a leaner and more sustainable growth model or whether it is on a debt-fueled path to disaster.

The clash of opinions could not have come at a worse time for the leadership in Beijing. The country’s political elite has been trying to paint a rosy picture of the economy ahead of next month’s five-yearly Communist Party Congress, putting the stock market rout and exodus of funds behind them.
This year’s better-than-expected growth performance had boosted the leaders’ confidence. Premier Li Keqiang told the heads of six multilateral agencies, including the World Bank and the International Monetary Fund, that China’s economy had improved and its debt level was “under control”, while the NDRC added that “market confidence has been rising” and “the economic recovery is of high quality.”

Much of the dispute centers on whether China’s 6.9% growth this year – lifted by property and exports – means the country has entered a new boom cycle, the South China Morning Post reports.