BNP AM

The sustainable investor for a changing world

| Article - 2 Min

What does President Xi think?

The crisis in the Chinese real estate market is not solely about the real estate company China Evergrande. The key to understanding China Evergrande’s fate and the consequences for the company’s customers, creditors and shareholders is to understand President Xi’s agenda.

For many years, there has been an implicit social contract between the Chinese people and the Communist Party, where the Communist Party ensured progress and high growth in return for the loyalty of the people. As China has grown, it has become necessary to renew the social contract as a result of difficulties in sustaining the high growth trajectory. Xi has therefore rewritten the premise with a lower economic growth outlook, but with a higher quality of growth (e.g. with a focus on the environment) and greater equality in society.

In other words, the Chinese Communist Party, led by President Xi, has expelled the Western-inspired capitalistic path. The new direction is “Common Prosperity Capitalism”, i.e. a more socialistic approach, where capitalism benefits all stakeholders. Maybe Xi took the decision seeing angry Americans storming Congress in early 2021. No matter what, the fact is, that China has changed direction since then.


This document has been prepared by C WorldWide Asset Management Fondsmæglerselskab A/S (“C WorldWide”). C WorldWide is regulated by the Danish Financial Services Authority under Danish laws, which differ from Australian laws. In Australia, C WorldWide is exempt from the requirement to hold an Australian Financial Services Licence by operation of ASIC relief. C WorldWide is permitted to provide financial product advice in certain classes of financial products to wholesale clients.
 
This document is distributed in Australia by BNP PARIBAS ASSET MANAGEMENT Australia Limited ABN 78 008 576 449, AFSL 223418 (“BNPP AMAU”). It is produced for general information only for the exclusive use of wholesale investors and does not constitute financial product advice, nor an offer to issue or recommendation to acquire any financial product. You should seek your own professional advice in relation to any financial product referred to. This document is distributed in New Zealand by BNPP AMAU. BNPP AMAU and C WorldWide are exempt providers under the Financial Advisers Act 2008 that are permitted to provide financial adviser services to wholesale clients as overseas financial advisers as they do not have places of business, and do not provide any financial adviser services to retail clients, in New Zealand.
 
In New Zealand, this document is only being provided to wholesale clients for the purposes of the Financial Advisers Act 2008 (New Zealand). Any opinions included in this document constitute the judgment of the document’s author at the time specified and may be subject to change without notice. Such opinions are not to be relied upon as authoritative or taken in substitution for the exercise of judgment by any recipient and are not intended to provide the sole basis of evaluation of any investment. The contents of this document are based upon sources of information believed to be reliable, but no warranty or declaration, either explicit or implicit, is given as to their accuracy or completeness.
 
BNPP AMAU and C WorldWide, to the extent permitted by law, disclaim all responsibility and liability for any omission, error, or inaccuracy in the information or any action taken in reliance on the information and also for any inaccuracy in the information contained in the document which has been provided by or sourced from third parties. Past performance is not necessarily indicative of future performance. This document may not be copied, distributed or passed on, directly or indirectly, to any person without the express consent of BNPP AMAU and C WorldWide.

Related insights

14:46 MIN
Market weekly – Chinese equities – ahead of the curve
chi loDaniel Morris
2 Authors - Uncategorised
27/04/2020 · 1 Min
Emerging market equities – reasons to expect another turning point
To access insights from our teams worldwide visit:
BNP AM
Explore VIEWPOINT today