In an apparent effort to ease concerns that ideology might predominate as Xi Jinping started a new term as president and strict COVID-19 curbs are having an increasingly negative impact on the world's second-largest economy, Chinese policymakers pledged on Wednesday (Nov. 2) that growth was still a priority and they would press forward with reforms.
A severe downdraft in the global economy brought on by soaring prices and rising interest rates is compounded by renewed COVID-19 lockdowns, negatively impacting China's economic activity, consumer confidence, and financial markets.
Companies that manufacture luxury goods, such as Estee Lauder Cos Inc. and Canada Goose Holdings Inc., lowered their full-year projections due to ongoing COVID-19-related retail closures and lockdowns in China. In the most recent fallout, Yum China, the owner of the KFC and Pizza Hut chains, announced it was temporarily closing or reducing services at more than 1,000 of its restaurants in China. NIO, a manufacturer of electric vehicles, also said it had suspended production in the eastern city of Hefei due to an increase in COVID-19 cases.
Last month, at the twice-decade meeting of the ruling Communist Party, Xi was elected to a third term as general secretary. At congress, he restated his support for the zero-COVID policy and pushed the party to bolster national defense in the face of economic uncertainty.
At the twice-decade conference of the ruling Communist Party, in which Xi won a third term, he pushed the party to improve national security, prepare for adversity, and reiterated his support for the zero-COVID policy despite the precarious state of the economy.
Senior officials from China's central bank, securities, and banking regulators reassured their audience via a video link in pre-recorded interviews for the Global Financial Leaders' Investment Summit in Hong Kong that China would maintain the stability of its currency and real estate markets and remained true to a pro-growth economic plan.
"International investors should read more carefully about the work report that President Xi delivered" at the congress, Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC) said. "There, he re-emphasized the centrality of economic growth in the entire work of the Party and the country, and that's very significant," showing China is fully focused on growth, he added.
Fang criticized short-term thinking in several reports and claimed that many of them "really don't understand China very well". Chinese investors have been buying up discounted shares of mainland companies as foreign investors flee the market, believing that perceptions of China outside have been overly pessimistic.