Li Pledges Graft-Smog Battle as Scrutiny of China Leaders Grows
Comment of the Day

March 18 2013

Commentary by Eoin Treacy

Li Pledges Graft-Smog Battle as Scrutiny of China Leaders Grows

This article from Bloomberg may be of interest to subscribers. Here is a section
“Corruption is incompatible with the nature of the government like fire is to water,” Premier Li Keqiang told a briefing after the nation's legislature ended two weeks of meetings yesterday. “A clean government should start with itself. Only when one is upright can he ask others to be upright.”

Li's comments signaled that fighting pollution and corrupt cadres will be top priorities for the team that took power last week and will rule China for the next 10 years. Communist Party leaders have warned that graft threatens to undermine their legitimacy and promised action against pollution after record smog blanketed Beijing in January.

Fighting pollution may stunt China's economic growth by forcing production shutdowns at times when emissions are high, said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong, who previously headed China research at Hong Kong's central bank.

“The risk of pollution becoming a binding constraint on China's growth is under-appreciated by the market,” Zhang said.

Eoin Treacy's view Today's news that Beijing property prices increased by 5.9% over the last year suggests that the administration will continue to attempt to curtail property speculation since once of its objectives is to make housing more affordable in an effort to reduce inequality. This puts greater emphasis on the need for further reform of well-publicised structural issues such as graft, the environment, social security and healthcare. The fact that the new government is already signalling that these are priorities is encouraging.

The Shanghai A-Shares Index extended its decline today and will need to sustain a move above 2425 to break the short-term progression of lower rally highs to confirm that more than temporary support has been found.

Back to top