FirstFT: Xi begins historic third term

China’s economy grew well below target in the last quarter, sending stock markets lower as the country enters a new political era following the appointment of President Xi Jinping to an unprecedented third term.

The delayed release of gross domestic product data showed that the second-largest economy in the world grew by 3.9 per cent in the three months to the end of September compared with the same period last year.

The announcement follows the conclusion of the Communist party’s 20th congress in Beijing over the weekend and the appointment of Xi to a third term in power, making him China’s most powerful leader since Mao Zedong.

In a sign of Xi tightening his grip on power he packed the new ruling Politburo standing committee with loyalists and sidelined former rivals.

But the closing session of the congress on Saturday was overshadowed by the extraordinary images of Xi’s predecessor, Hu Jintao, being escorted off the leadership rostrum disrupting what is normally a carefully choreographed event.

Hu Jintao is escorted out of the closing session of the Chinese Communist party’s congress in Beijing
Hu Jintao is escorted out of the closing session of the Chinese Communist party’s congress in Beijing

The official Xinhua news agency wrote on Twitter that Hu left because “he was not feeling well”. Video and photos appeared to show party officials first trying to pull — then cajole — him out of his seat and off the stage.

Hu’s apparent reluctance to leave the platform provided fodder for observers who speculated that the 79-year-old, who served as party general secretary and state president for two five-year terms from 2002 to 2013 until Xi took over, was forced to leave.

Meanwhile, confirmation China’s economy is on course to expand below the official target of 5.5 per cent this year sent shares in China and Hong Kong sharply lower today as investors worried about the outlook for growth.

The Hang Seng China Enterprises index in Hong Kong fell as much as 7.4 per cent to a 14-year low. The benchmark CSI 300 index of Shanghai and Shenzhen-listed stocks was down as much as 3.1 per cent.

China is grappling with a property sector slowdown and the consequences of the strict zero-Covid policy of lockdowns which Xi confirmed last week would stay in place.

1. Rishi Sunak on course to become Britain’s new prime minister The former chancellor is on course to become Britain’s new prime minister after Boris Johnson pulled out of the contest last night, a surprise development that sent sterling higher this morning. Penny Mordaunt, leader of the House of Commons, remains in the contest but only has 25 declared backers, well below the 100 needed to secure a nomination and an official vote of Conservative MPs. Nominations end at 2pm today.

2. Yen swings as traders speculate about third intervention After starting the morning in Japan at around ¥149.71 per US dollar, the yen exploded to reach ¥145.56 at 8.44am in the space of a few minutes. But by the afternoon the yen was back at the level before the morning surge began, prompting speculation that the Bank of Japan had once again entered the currency market to buy the yen.

3. Russia warned against Ukraine escalation The US, UK and France have warned Russia against using claims of an alleged Ukrainian effort to use a “dirty bomb” as a pretext to escalate the war against the country. The three countries held talks with Russian defence minister Sergei Shoigu over the weekend. Shoigu also spoke to his Turkish counterpart. Kyiv denied it planned to use the conventional explosive devices that spread radioactive material.

4. Hedge fund manager predicts Japan-style bear market Global stock markets could be heading for a Japan-style bear market lasting decades, said Boaz Weinstein, who runs New York-based Saba Capital which was one of the world’s top-performing hedge funds in the market turmoil of 2020. “I’m very pessimistic. There isn’t a rainbow at the end of all this,” he told the Financial Times.

5. European offshore wind companies push into Asia With South Korea, Taiwan and Japan having committed to boosting their share of renewables as part of net zero targets, European companies are pushing into east Asia’s offshore wind market, seeking to leverage their technological advantages over Chinese competitors.

The day ahead

Outlook for markets US stock futures fell ahead of a week of third-quarter earnings results for Big Tech companies including Meta, Alphabet and Amazon. Futures contracts tracking Wall Street’s S&P 500 fell 0.5 per cent ahead of the New York open. The broad-based index last week recorded its biggest five-session gain since June, adding 4.7 per cent

Trump Organization trial begins The former US president’s family company has been charged with tax fraud by Manhattan’s district attorney. The Trumps face a penalty of at least $250mn in what the district attorney claims were ill-gotten proceeds. The judge and lawyers in the case will today begin the process of jury selection. Film producer Harvey Weinstein faces a criminal trial in Los Angeles that begins today.

What else we’re reading

Glitz and Gladwell: the infighting over prized JPMorgan wealth clients Infighting at JPMorgan Chase over how to manage the fortune of retired baseball star Alex Rodriguez has escalated into a two-year battle within the bank, involving prominent personalities such as pop star Jennifer Lopez and author Malcolm Gladwell, as well as chief executive Jamie Dimon. “I thought he was supposed to be a statesman, Jamie Dimon. This is like a game an 11-year-old would play,” Gladwell told the FT. 

A political backlash against monetary policy is looming The credibility of central banks is only as good as the credibility of the macroeconomic regime as a whole. That is not to say central bank independence should be jettisoned, but to ask openly whether it actually works for the economy. Avoiding a debate over whether our macroeconomic regime is fit for purpose is more perilous than having one, argues Martin Sandbu.

Steven Pinker, the ‘oracle of optimism’ The Harvard psychology professor does not sign on to the pessimistic conclusion that humans are inherently irrational. His books The Better Angels of Our Nature and Enlightenment Now compile data that show humans are living longer and better, even if news headlines suggest the opposite.

Harsh lessons learnt from corporate rebrands Up until last Thursday, Manchester-based travel business Intravelr went by the name Invasion. The group was motivated to rebrand after Russia’s invasion of Ukraine. While they had sensible reasoning, the decision to drop the second “e” in the spelling of their name makes less sense, writes Pilita Clark.

‘Big Brother’ managers should turn the lens on themselves The number of employers using data surveillance software to monitor employees has doubled since the start of the pandemic, writes Rana Foroohar. The rise of workplace surveillance represents what Microsoft chief executive Satya Nadella has called a new “productivity paranoia” on the part of employers.

Sport

Formula One driver Max Verstappen paid tribute to the founder of the Red Bull racing team after winning the US Grand Prix in Austin, Texas yesterday. Dietrich Mateschitz, the Austrian entrepreneur who co-founded the Red Bull energy drink company, died on Saturday aged 78.

Max Verstappen during the Formula One US Grand Prix
‘That one was for Dietrich,’ Max Verstappen said after winning the Austin Grand Prix and securing the constructors’ title for his Red Bull team © AFP via Getty Images