The performance of the economy has nothing to do with investment returns. Paradoxically, the correlation between economic growth and stock market returns is actually negative[1][2][3]. Investors can do well in stagnating economies. Also, the anti-corruption campaign[4] happening in China right now is probably the farthest reaching since its imperial days.

[1]: https://www.economist.com/blogs/buttonwood/2014/02/growth-an...

[2]: https://www.ft.com/content/8b5ae298-a065-11e2-a6e1-00144feab...

[3]: http://www.moneyobserver.com/opinion/gdp-makes-stocks-grow-f...

[4]: https://en.wikipedia.org/wiki/Anti-corruption_campaign_under...

The economic explanation for this is quite simple: huge growth in the stock market means that money is being taken from productive and moved into speculative vehicles. The higher the growth in the stock market, the higher the desire to move more money into stock (the phenomenon of "chasing returns"). So, contrary to what most economists say, a high growth in the stock market is a primary indicator that the real economy is lacking investment. Of course the result is that a huge recession follows, which is "explained away" by economists as the "normal investment cycle".

Investors look at the short term. In the short term this works well.

Even In the longer ter, individual investors may well personally do very well (be on the good side of the supreme ruler and the possibilities are very good).

If anything, investors will be encouraged to invest in China due to this news. Xi has been a stable leader for the country. This news simply means more of the same.

More of the same would be keeping the term limit, this signals a regression to the worst tendencies in humanity, eroding the laws that are designed to prevent them. Even if Xi is a stable leader for the next 30 years, will the next leader to take advantage of the removal of term limits be the same?

If you want to see regression to the worst tendencies in humanity look no further than democratically elected Tony Abbott going on an ideological crusade to undo everything Julia Gillard’s government achieved. The same is playing out with Trump dismantling everything the Obama Administration accomplished.

Worry about that after 30 years then. I don't pretend i can predict what's going to happen at that time frame. Isn't AI supposed to take over everything by then?

Assuming we're talking about foreign investors. Quite simply that's going to depend on the policies, not whether Xi is in there or not.

As a party dictatorship with routinely transitioned politicians, China's government has been fairly stable in recent times. Xi clearly isn't necessary in any regard, he's trying to make himself necessary. Hu Jintao was a stable leader that oversaw one of the fastest economic expansions in world history. He also wasn't necessary, in terms of remaining perpetually in power. Xi inherited that nicely built-up economic position. It's the policies that Xi follows/implements that will determine investor confidence, just as it was for Hu Jintao and Jiang Zemin (also a stable leader that didn't need to remain in power perpetually). Xi is properly replaceable like the others, insofar as he doesn't implement political changes that forcibly make him otherwise. The power move that Xi appears to be going for, is all down to his personality, rather than necessity, which is in stark contrast with the prior two Presidents.

Peaceful power transitions are great for stability.

Who of the previous leaders of China have been unstable?

I doubt they meant to imply previous leaders were unstable. Stability is good for investment, and the current government is stable. A new leader could be any of the kinds of leader that make investors look elsewhere.

I think this subthread is arguing about which is larger:

- The risk that a stable leader with increasingly unlimited power will lead to stagnation, deep corruption, or war.

- The risk that a disruptive leader emerges after Xi and is not countered in time by government mechanisms (e.g. internal elections within the party).

Historic consensus seems to be that the former is the bigger danger, which is why even the CCP previously put a limit on presidential terms.

Of course they didn't mean to, but their argument bears this implication. Hard to argue for improvement when the status quo was just as good.

How can you have stability when you're at the whims of a dictator. Having a dictator is quite different from a single-party rule that changes its leaders.

It's more about an institution vs a single man.

Yes this was the point I was trying to make. It is the status quo. That can only be good for business.

The status quo was a stable political system that is now changed for a dictatorship.

Your account is 4 days old and only comments are pro-China party comments. Hum.

Sample size = 2.

Jiang Zemin?

In a sense they have a "permanent ruler," the Politburo. But in reality the leader is 99%, unless he makes sudden /unpopular moves.

But then, he's 64, he has another 5 legit years, so he'll be 69 when his 2 terms end. He might not have that much time. But who knows...

All the modern Asian success stories: Japan, Singapore, South Korea, Taiwan ... had the same rulers/ruling party for decades.

  Japan-
  Shinzo Abe: 2012-current

  Singapore-
  Halimah Yacob: 2017-current
  Lee Hsien Loong: 2004-current

  South Korea-
  Moon Jae-in: 2017-current
  Lee Nak-yeon: 2017-current

  Taiwan
  Tsai_Ing-wen: 2016-current

I'll maybe give you Singapore's PM, but this is definitely not "decades".

had the same rulers/ruling party for decades

Alternatively (with apologies for playing a bit fast and loose in terms of President/Prime Minister/Secretary - political systems come in many shapes and sizes) and note that in some of these political party doesn't make much sense - when a military strongman stages a coup and holds power for a decade and a half, is there really a ruling political party?

    Japan-
    Liberal Democratic Party: 1955-1993, 1994-2009, 2012 to present

    Singapore-
    People's Action Party: 1959 to present
    Lee Kuan Yew: 1959 to 1990
    Goh Chok Tong: 1990 to 2004

    South Korea-
    Syngman Rhee: 1948 to 1960 (interestingly, exempted himself from an eight-year limit in 1954)
    Park Chung-hee: 1963 to 1979 (took power in military coup, assassinated)

    Taiwan-
    Chiang Kai-shek: 1950 to 1975
    Kuomintang Party: 1950 to 1996, had the advantage of being a single-party state until roughly late eighties

Definitely some decades in there.

That's goalpost motion, though. By that standard the Chinese policy change in the headline is a total nothingburger because the communist party has been in power since the revolution and will continue to be after Xi is dead.

Obviously, no: the headline is significant; east asian governments are subject to policy change and reform even within a single party rule; and this is a canard. There is a difference between indefinite rule by an abstract "party" and indefinite rule by an actual person. And China is crossing that gap.

That level of political discussion is beyond me. I'm just presenting some examples of East Asian countries that had the same ruler / ruling-party for decades.

What EliRivers described is exactly what I was referring to. And I don't think the "headline" is particular important btw.

How is removing hard limit on two terms "crossing that gap"? It'd be a much greater leap if Xi wants to rule indefinitely. Xi (and the communist party) wants stability, and he has to answer to what the people want to keep staying in power

I've lived in China, Singapore, and US for a long time. And I have to say Singapore government is apparently the most reasonable one out of the three. It most likely also have highest approval rate.

Even Singapore's PM was given a popular mandate via parliamentary elections. Singapore and the PAP has some aspects of authoritarianism, but it still believes deeply in the rule of law.

I would encourage further self-directed historical research if you honestly believe this to be the case. Some starters: http://www.bbc.com/news/world-asia-33621862 https://www.talkingdrugs.org/singapore-supports-burmas-drug-... https://www.smh.com.au/news/business/singapore-a-friend-inde... https://books.google.com/books?id=VQyX-pExxvMC&pg=PA3&lpg=PA... https://thediplomat.com/2015/02/soft-repression-the-struggle... http://sgforums.com/forums/10/topics/339300

Halimah Yacob is the President, not the Prime Minister, very different positions. Look up "Minister Mentor."

Lee Hsien Loong is LKY's son.

Those leaders had mandates from the people in any case, via elections they could lose. Unless you are talking about the Taiwan and South Korea dictators of Mao’s era.

Yes. I was in particular refering to how these countries were ruled during their "growth period".

The Chinese communist obviously don't have a democratic mandate. But I think it would be a mistake to think that they don't have widespread popular support.

I don’t think it’s really about individuals though. For every country with a long period of continuous successful rule, I can point you to a country with a long period of failed rule, such as Zimbabwe.

The point is, no matter how great Hu is as an individual the danger is that granting him perpetual unquestioned power creates a precedent for a future monster to gain a similar lock on power. In a democracy, the voters can depose a monster peacefully. In the cureent Chinese system a monster would only get 2 terms. So the question is, are you prepared to accept Hu getting power to life, at the risk of a future person to get it being a Mugabe, or Gaddafi, or Amin?

In a system with very few constraints on absolute power, is it really prudent in the long term to remove all of the remaining ones? Finally, how much can you trust the judgement of someone willing to impose that risk on his country for his own benefit?

I don't think Mao's time could be considered very equivalent to today. There were a lot of dictators around after WW2, but many gave way to stable democracies, and those that didn't weren't prosperous.

The problem with the CCP is that there is no real feedback loop. Their support is very fragile, and it would just take one recession to break it (they have no "lets throw the turkey's out" pressure valve).

I think it is quite relevant. China is undergoing today what Japan went thru at Mao's time.

My guess is that CCP is going to be popular and safe at the realm as long as growth is strong (so maybe we agree there).

Growth isn't going to always be strong. Economic cycles are inevitable, even if they manage to kick the can of a correction down the road today, it will just come back worse in the future.

People in China can only express their discontent by rioting (which happens in China, a lot). They have no other real way of communicating with officials, they can't even make sneaky jokes on the internet anymore to express their dissatisfaction. That alone is a very dangerous situation.

I can't tell whether the people in this thread claiming this will be the downfall of China are serious. Do you really believe that, or do you just want it to be true because you're afraid of China?

Probably both. Everyone, including and especially China's own citizens, should be very afraid of the current regime and its path towards a surveillance state. I don't think anyone in this thread actually expects China to fall within a few years, but it isn't unjustified to believe that this will be the downfall of China, and that we should be very worried about an upcoming war.

>it isn't unjustified to believe that this will be the downfall of China, and that we should be very worried about an upcoming war.

Why - will such a civil war spill beyond China's borders?

A Chinese civil war would spill all over the place. Look at the chaos surrounding the Syrian civil war and scale it up by at least an order of magnitude. A billion refugees trying to flee across the borders mostly in the east (where population densities are highest) would turn the surrounding countries into giant refugee camps, unless they somehow manage to close their borders.

North Korea is so fragile that it would follow shortly thereafter. South Korea (a US ally) would have a huge mess on their hands.

Japan (another US ally) has got an ocean to protect it, but given the huge shipping volume in the region, shiploads of refugees would try crossing anyway.

So that means that the US would have even more reason to intervene than in other conflicts.

I don't know how much Russia cares about it's eastern territory, but it's unlikely they'd sit around doing nothing.

By now there are 4 countries with nuclear weapons involved, and I haven't even mentioned India and Pakistan, who usually don't appear to be the interventionist type, but they have a common border with China. Who knows how they might react.

Basically, any war involving China is bound to be WW3 levels of bad.

While the Cuban Missile Crisis was playing out China and India were fighting a small war: https://en.wikipedia.org/wiki/Sino-Indian_War .

Personally I'm afraid it could result in China attempting an invasion of Taiwan. This could lead to war between the US (as well as other countries) and China.

I doubt the US would actually go to war with China for an invasion of Taiwan. We happily gave Taiwan’s UN seat to China to establish relations and no longer have official relations with Taiwan at all. I don’t think we’d sacrifice the relationship with our largest trading partner over Taiwan. Nor do I think our politicians would sign up for a war against China except in the face of an existential threat.

I doubt the US would not actually go to war with China over an invasion of Taiwan. At the very least, there would be huge consequences in the very quick remilitarization of Japan and the start of a new cold war.

Remember that time the US went to war with Russia over the invasion of Ukraine?

An invasion of Taiwan would likely garner a similar response. Heightened tensions, international sanctions that don’t seem to do much, and yes, increased military presence in nearby allies. Outright war would be costly and endless and frankly unwinnable.

I don't think that the two are really that comparable. The US is much better equipped to help thwart a Chinese invasion of Taiwan than the Russian invasion of Ukraine. The invasion would be very far from an easy operation or even a sure win. And even ignoring America's historical support of Taiwan against China, if China were to successfully invade Taiwan, it would change the security situation of the area to such a degree that even military brass would be vary wary to not take a stand.

> Outright war would be costly and endless and frankly unwinnable.

I'm not sure why you think this is the case. If the US were to try to invade China, then yeah it would basically be unwinnable. But why would the US do that? They would only be trying to contain them. If they could help thwart and invasion and then shutdown the Chinese navy, then they would basically already have won by any reasonable measure.

You understand you are talking about two major nuclear powers, don't you?

Not comparable at all. Protecting Taiwan has been a foundational element of American foreign policy. A Chinese invasion would signal to the world a huge shift in power and would effectively be the end of US dominance over the world stage.

It would be a shift, not an end. The world is essentially dividing itself up into the three regions described in 1984, to an almost eerie extent. The US will maintain its own power base through increased control over North and South America.

The only chance that would trigger China invading Taiwan is that it declares to be an fully independent country, in which case China will probably do so at any cost, even if it means full scale war with U.S. Will U.S. be ready for that?

Taiwan and Ukraine are very different.

The U.S. doesn't have much history promising Ukraine defense as it was part of the U.S.S.R. during the Cold War. In contrast, Taiwan was practically there since 1949.

Taiwan's economy is multiple times the size of Ukraine's and is comparable to the likes of Saudi Arabia. To not defend Taiwan would send a very bad signal to all American allies that unless you're worth more than Taiwan, we'll sell you out. Assuming China continues to grow more powerful, this also means South Korea would be in danger as well. This is not even accounting the fact that if China controls Taiwan, China will control a majority of sea lanes to Korea and Japan. If she wished then she could interfere with oil supplies to those countries.

Plus the U.S. already goes great lengths to restrict China from acquiring U.S. technology, much of which has supply lines and partners in Taiwan. Letting China take Taiwan would mean a massive change unless you think we'll just accept that every Taiwanese company now will be forced to put backdoors for the Chinese.

> Remember that time the US went to war with Russia over the invasion of Ukraine?

I know you're joking, but ...

it was a cyber war, and it's still happening :)

I don't even think the US would go to war with China over an invasion of Japan.

In our highly globalized world. A civil war in China, India, Europe, Russia, or America is almost guaranteed to spill out due vast amount of global resources already being fought over in light skirmishes, proxy wars, and shows of power at various borders.

In China's specific case, India and China are fighting over borders. China and the US (allies) are running into issues over resources in the South China Sea. Also Russia and the US both are increasingly their navy presence in the Pacific. It's a powder keg waiting to go off for sure.

You forgot to include Little Rocket Man in your powder keg.

I think they meant a war with regional powers and/or the USA

Doesn't seem to me this is a step towards China growing into the preeminent power. More like a small step toward autocratic rule and a cult of personality.

Xi is a fine leader — I don't believe problems would start with him. More so his successor who may have decades of rule.

Mugabe started out as a fine leader too..

Yes, this is the story everywhere. It all works this way, until you get old, and your kids think they have a right to the throne and being a old parent you usually have to yield. Also decades of rules would have weakened most institutions who could likely stop this from happening. Then you use military etc to suppress any dissent. And then you have a dynasty in making.

the second.

So you’re saying the Linux kernel would get better if we overthrew Linus?

We could do so at any time if the community decided it was for the better. Linux being open source means anyone can fork it if needed be.

China is setting the stage for an actual dictator.

An operating system kernel and the lives and destinies of more than a billion people are very different things to manage.

The problem with dictators is not that they are all bad for their countries, it's that replacing a bad dictator is too difficult.

If Linus were bad at his job, you'd only have to find someone better and start pulling your kernel source from them. No civil war necessary.

It's not so simple - there are implicit institutions in the network of who knows who, and who makes decisions that get executed, vs just having opinions. The revolution would be in the form of a fork that would need to fight for attention, money, allies, etc. - not wholly unlike a real revolution.

that's a matter of 'forking' resource usage... For a nation-state level, it's going to be a lot dirtier (defaming, violence, and possible civil war)...

Really?

Probably, at least from a security point of view.

Given the junk people wanted to merge and Linus shot down, I doubt it.

Actually I might put money into China off this news. Irrespective of other risks of China - the state capitalist model is working and Xi is going to hold to this implementation of it.

If this system is working well (I'm not judging), and the only way to sustain it is to annoint a dictator for life (because the rest of the Communist Party won't support this system?) then something is dangerously wrong.

No dictator for life has been appointed, they just repealed the presidential term limit. Xi has been in office five years, america had FDR for 12 years.

FDR would have been 16 years, but he died after 13.

But he didn't repeal a term limit. There was a two-term limit in precedent, but not in law, so FDR didn't have to repeal anything. But people saw that, and put a two-term limit in law. Any future FDR or Xi in the US will have to change the law. And yes, that will set off warning alarms in the US, if it ever happens.

Warning alarms have been ringing since the start of the last US election, warnings won't be enough to stop it from happening.

> Warning alarms have been ringing since the start of the last US election...

Agreed.

> ... warnings won't be enough to stop it from happening.

Here I disagree. For it to happen in the US now would require a constitutional amendment. I don't see any way that would happen now. Especially since seeking one would make the alarm bells ring much louder.

Or, for it to happen now would take ignoring the constitution. I'm pretty sure that would trigger a civil war.

Either way, in the US it's much harder than just having a party congress decide that it will be so.