Shipping is holding its breath as political leaders gather in Beijing. Charlie Du Cane pours some caution to those hoping Xi Jinping’s reappointment will instantly see an economic boost to shipping’s most important nation.
Chinese ‘Kremlinologists’ have been working overtime recently – to their usual lack of good effect. We have had rumours that have varied from the ridiculous idea of a palace coup, to the more believable that Xi Jinping will get his unusual third term, but with his wings somewhat clipped.
In 2012 I was living in Beijing during the 18th Party Congress when Xi took over. The rumours then were all consuming and wild. Gun shots had been heard outside the Ministry of State Security, Xi was under house arrest, Xi was dead or badly injured. However, despite the fact there was some turmoil at the time with Bo Xilai’s failed manoeuvres, the only tangible effect I saw was the garden of my neighbourhood restaurant was shut for the three days of the meeting.
China has become the biggest star in our universe
Yet this weekend the world will rightly be watching as the head honchos of the CCP gather in Beijing. No one will be watching harder than the shipping industry. China has become the biggest star in our universe. No matter be it finance, shipbuilding, owning, or operating, China makes the weather in them all. However, especially in a dry bulk sector that thought it was booming until all of a sudden it really wasn’t, we only have one question on our mind. When will China start buying again? More than Ukraine, more than the broader economic head winds of inflation and spiralling interest rates, the greatest single fact in dry bulk shipping today is that China is not buying raw materials in the way it was as little as a year ago.
Why has this happened? Short term, the biggest reason of course is their draconian zero covid policy putting a massive break on the economy. However, there are a host of other issues lurking behind that which add to this. As early as 2015, the Chinese economy was beginning to slow after three decades of development at the sprint, its capital allocations were becoming ever more inefficient, its population ageing and shrinking. Equally China has become less maniacally focused on development at all costs, increasing commitments to sustainability, work life balance, and, recently, on equality. These have all slowed the economy down.
Unfortunately for those waiting for a Beijing miracle, the Party Congress is not a policy meeting. It’s an enormous exercise in HR change management. This is where all the key leadership positions get sorted out and we will see who is in, who is out, and where power will truly lie for the next five years.
Once settled in, the new- or not so new- leadership will begin to prepare for the ‘Two Meetings’ that will happen early next year. This is where policy decisions get made and approved.
Whilst policy announcements are normally few and far between at Party Congresses we will get a sense of tone as the biographies of who is in charge begin to emerge. Whilst this is a more useful pastime than Kremlinology one should be careful not to lean on it too heavily. I am old enough to remember that people looked at Xi Jinping before 2012, and decided he must be a liberal reformer. So caveat emptor anyone who buys into any sure-footed analysis of what is going on in China now or indeed ever.
Fifteen years of living in China taught me only one thing. Nobody really knows anything about the place – even most Chinese. I will, hopefully, be entirely disproved as the Chinese economy goes rocketing ahead next week after a series of clear policy announcements, and we can get busy moving the resources of the world there again. I am not holding my breath – and nor should the shipping industry.
As always with Charlie and China, a very well-written piece with a huge degree of credibility – thanks on behalf of all readers
A really excellent article.