Economy

Investors worldwide issued a sceptical verdict on Xi Jinping’s third term in office, selling shares in Chinese companies after the country’s leader wrapped up a Communist party congress that signalled a shift in focus from the economy to security. The sell-off began yesterday morning in Asia, where Hong Kong’s Hang Seng Tech index fell 9.7 per cent, a one-day move that matched its largest ever drop. It continued into the US trading day, where several of the most well-known Chinese tech groups listed on Wall Street fell sharply. Nasdaq’s Golden Dragon index, which tracks US-listed shares in Chinese companies, fell 14.4 per cent as Alibaba, JD.com and Pinduoduo faced heavy selling. The record one-day drop for the index left it down by about 50 per cent this year. Analysts said that the sell-off was compounded by Beijing’s release of economic data, delayed while the party conference was under way, that showed China’s economy grew by 3.9 per cent year-on-year in the third quarter, below the government’s annual goal of 5.5 per cent. But they also noted that Xi’s overhaul of the party leadership during the week-long 20th party congress, which ended at the weekend, had given power to loyalists more concerned with China’s geopolitical rivalry with the US than with economic reform.Opinion: China’s economy will not overtake the US until 2060, if ever, argues Ruchir Sharma.

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Five more stories in the news1. Rishi Sunak to become UK prime minister Rishi Sunak is set to enter Downing Street today as Britain’s youngest prime minister in modern times and its first non-white leader, with a vow to get to grips with the “profound economic challenge” facing the country. (He’s also the first with an MBA and a past life at Goldman Sachs.) News in-depth: Our reporters take a look at Sunak’s daunting in-tray as UK prime minister2. US charges Chinese officers with interference in Huawei probe The Department of Justice alleged two Chinese citizens paid a US law enforcement officer $61,000 in bitcoin to obtain information on the prosecution against a big Chinese telecoms company reported to be Huawei. The DoJ disclosed two additional cases each of which “lays bare the Chinese government’s flagrant violation of international laws”, FBI director Christopher Wray said.3. West sees Russia’s ‘dirty bomb’ claims as pretext for escalation A flurry of phone calls from Russia’s defence minister Sergei Shoigu warning of a “dirty bomb” attack has sent alarm bells ringing in western capitals nervous about Moscow’s threats to use nuclear weapons against Ukraine. The threat was condemned by the US, UK and France as an attempt to lay the ground for a “false flag” attack blamed on Ukraine.4. 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 yesterday. 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. 5. 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.The day aheadSingapore CPI inflation rate data The city-state’s headline and core inflation are expected to increase when the September consumer price index is published today. Use our global inflation tracker to see how your country compares.

Future Investment Initiative The event dubbed “Davos in the Desert” will begin in Riyadh today. Although relations between the US and Saudi Arabia may have plunged to a new low, American banks and investors are still flocking to the conference. Australia Budget announcement Treasurer Jim Chalmers will present what has been billed as a “family-friendly” Budget on Tuesday. But wage growth will not keep up with inflation in the first federal Budget of the Albanese government, the treasurer has said. (ABC) World Movement for Democracy’s Global Assembly The organisation’s 11th annual summit will kick off in Taipei today with hundreds of democracy activists, experts and policymakers expected to attend. What else we’re readingThe Taiwanese chipmaker caught up in the tech cold war TSMC finds itself at the centre of both a tug of war between Washington and Taipei and the fiercest front in the new cold war between China and the US. Meanwhile, Taiwan’s determination to keep as much of the industry as it can on the island is clashing with US strategic goals and its fears of China.Xi Jinping’s China and the rise of the ‘global west’ In its efforts to counter China’s global influence, the US is looking to a network of allies, which can loosely be called the “global west”. If it is to keep this group together, the US will have to persuade its partners that the darkest fears about Russia and China are justified, writes Gideon Rachman. Recent scenes from Beijing help to make that case.Office workers embrace hybrid working as post-pandemic norm Trips to workplaces in the world’s seven largest economies are still well below their levels before the coronavirus took hold in early 2020, according to a Financial Times analysis of phone-tracking movements published by Google.The fight 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. ‘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.TravelIn the wilds of northern Iceland, Ineos billionaire Jim Ratcliffe is on a mission to save the Atlantic salmon. He is buying up rivers in a bid to protect the species — while also enjoying some of the world’s best fly-fishing. More

Markets remain “febrile” and the medium-term fiscal plan set for next Monday will be crucial for investor clarity over the UK’s fiscal policy and wider economic context, a senior Bank of England official warned on Monday.Gilts rallied sharply on Monday after Rishi Sunak was confirmed as Britain’s next prime minister. Economists see him as likely to broadly endorse the fiscal tightening planned by chancellor Jeremy Hunt, relieving pressure on the central bank to raise interest rates aggressively to curb inflation.But Dave Ramsden, BoE deputy governor for markets and banking, told the House of Commons Treasury select committee that government borrowing costs were still higher than before September’s “mini” Budget.He added that “things have not settled down yet” because of political events but also uncertainty over the monetary and fiscal outlook.“Credibility is being recovered, at least on that benchmark measure, but that has to be followed through,” he said, adding that a return to “stability around policymaking and around the framing of fiscal events will be really important”.If Sunak confirms the current plan for a Halloween statement, with accompanying forecasts from the Office for Budget Responsibility, the independent fiscal watchdog, the BoE will have three days to assess the implications before its next interest rate decision.In September, the Monetary Policy Committee met to set policy just a day before then chancellor Kwasi Kwarteng’s “mini” Budget upset markets, with policymakers unable to take into account the effect his package of unfunded tax cuts would have on inflation.Ramsden, who spent much of his career as a Treasury civil servant, said this sequencing was unusual, while the framing of the event — with no accompanying economic or fiscal forecasts — had been “unprecedented”.“Getting clarity about the fiscal arithmetic and wider economic context as the OBR sees it will be really important. If that is available by next Monday, that will be really important,” he said, while underlining it was for the government to decide the fiscal statement’s content and timing.Ramsden said BoE staff were already liaising with Treasury officials about the factors that would influence the OBR’s forecasts. He said a key element would be the form the government’s energy price guarantee took, following Hunt’s announcement that it would become more targeted from next April. Although he has consistently been among the more hawkish members of the MPC, voting against the majority for a 0.75 percentage point increase in interest rates in September, Ramsden did not give any new steer on the scale of tightening he would favour next week.Instead, he said the MPC was “acutely aware” of the effect its decisions would have on households facing higher mortgage payments next year, but would take whatever steps were necessary to return inflation to the 2 per cent target. Ben Broadbent, another BoE deputy governor, last week cast doubt on financial market projections that UK interest rates might need to rise to more than 5 per cent to bring down inflation. That message was echoed at the weekend by Catherine Mann, another MPC member. More

Today’s top storiesRishi Sunak has succeeded Liz Truss as the new UK prime minister after winning the Tory leadership contest. The former chancellor, a rightwing but pragmatic Brexiter and Britain’s first non-white premier, has a tough task ahead restoring the country’s credibility with global investors.New PMI survey data suggesting the UK has fallen into recession highlight the scale of the challenge facing Sunak. The reading of 47.1 in October, where 50 marks the line between business activity shrinking and expanding, was a 21-month low. Another survey showed consumer confidence plunging. Philips, the Dutch health tech company, plans to cut 4,000 jobs or 5 per cent of its workforce to meet the costs of legal action on faulty medical devices as well as supply chain pressures. For up-to-the-minute news updates, visit our live blogGood evening.Disappointing growth data have added to investor concerns about the future direction of China after a landmark congress of the Communist party handed president Xi Jinping an unprecedented third term in power.Today’s GDP numbers — postponed from last Tuesday when the congress was in full flow — show the economy expanded 3.9 per cent in the third quarter, far short of the full-year target of 5.5 per cent, already the lowest in three decades. The news knocked Chinese stocks and added to the unease of overseas investors in Hong Kong over Xi’s appointment of hardliners to his leadership team. Tech companies such as Alibaba, already suffering from a domestic regulatory clampdown, were also hit in US trading.Ruchir Sharma, chair of Rockefeller International, writes in the FT today that the slowdown in growth means China is unlikely to overtake the US as the world’s largest economy until 2060 — if at all. Xi’s goal of making China a mid-level developed country in the next decade implies a growth rate of around 5 per cent, but the current outlook suggests just half of that, Sharma says.The country is still suffering from the crippling effects of zero-Covid lockdowns that have hit consumer spending, as well as a continuing property crisis. Other headaches for Xi include new tech export controls from the US that will affect companies such as chipmaker SMIC: read our explainer to get the full picture.Today’s data follow a consolidation of Xi’s power at the congress, with rivals purged from his team and the promotion of loyal Shanghai chief Li Qiang — who presided over the city’s draconian lockdowns — to become the Communist party’s second-highest-ranking official.As Xi strengthens his grip — graphically illustrated by the sight of former president Hu Jintao being forced to leave the stage — he faces a renewed effort by the US and its allies to forge a new “global west” in opposition, writes chief foreign affairs commentator Gideon Rachman. This grouping, led by a reinvigorated G7, aims to reduce countries’ economic reliability on China by measures such as “friendshoring” and increased investment in global infrastructure to match Beijing’s Belt and Road Initiative.Former Australian prime minister Kevin Rudd, also writing in the FT, says Xi’s congress performance is confirmation of an aggressive and statist worldview, with national security replacing the economy as China’s central focus. It also marks the return of “ideological man”, Rudd argues, elevating Xi in the pantheon of the country’s leaders and putting him on a par with Mao Zedong.Join FT journalists for a subscriber-only briefing on what the Communist party’s national congress signifies for China, the world and business. Register here.Need to know: UK and Europe economyThe PMI reading for the eurozone was as gloomy as the UK’s, showing a bigger than expected contraction in output in manufacturing and services and the same score of 47.1, the lowest for the bloc since November 2020. The UK energy industry said the government’s de facto windfall tax on low carbon electricity companies would have “catastrophic consequences” for investment in green technology. The policy, still progressing through parliament, would impose a revenue cap on low carbon generators.Need to know: Global economyThe PMI reading for the US showed business activity shrinking for a fourth straight month in October, hitting 47.3, thanks to inflation and slowing demand. President Joe Biden’s adviser Brian Deese told the FT the US economy was strong enough to avoid recession, experiencing instead a “soft landing” with a shift to slower growth rather than a deep contraction. 1970s and 1980s-stye “austerity shopping” by European, US and Asian consumers is back as inflation hits household budgets. New data show an increase in packed lunches, buying out-of-date food, cutting back on booze and visiting multiple supermarkets to secure the cheapest deals. The Brazilian presidential election run-off takes place on Sunday. As campaigning intensifies, incumbent Jair Bolsonaro has hit out at the supposed bias of the judiciary towards his rival Luiz Inácio Lula da Silva as it clamps down on disinformation. Despite pledges to learn the lessons of Covid-19, fears are growing that the darkening economic outlook will hit funding for global health emergencies such as antimicrobial drug resistance, Ebola in Africa, cholera in Haiti and polio and monkeypox in the US and other developed economies. Read more in our special report: Communicable Diseases.Need to know: businessProfit warnings at FTSE-listed companies this quarter are at the highest level since the global financial crisis as the cost of doing business soars while demand is hit by worsening economic conditions. Several UK companies are offering staff perks to help offset rising living costs.US tech giants are set to report slowing revenues in third quarter announcements this week, ending the pandemic-fuelled surge in digital activity over the past two years. The head of WFS, one of the world’s biggest air cargo handlers, said that despite the darkening global trade outlook, the rise of ecommerce and demand for faster deliveries were driving a long-term shift towards moving goods by plane.A lack of blockbusters means box office takings at global cinemas are still far from hitting pre-pandemic levels. Consumers are also becoming more discerning, says one forecaster: “Cinemas’ main competition isn’t Netflix, it’s other out-of-home options, and there’s a lot of stuff you can do nowadays, from laser quest to golf to escape rooms. You have to compete with all that on price and experience.”

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The World of WorkThe work-from-home trend is driving “productivity paranoia” on the part of certain managers as they look for new performance metrics, writes columnist Rana Foroohar. But increasing employee surveillance is causing stress and resentment among workers and isn’t that effective anyway, she argues.One definite consequence of hybrid working in large economies is the noticeable drop in commuting. The shift poses challenges for dense urban centres that are organised around a high concentration of commercial activity.Moving Beyond the Great Resignation is a free FT webinar on November 1 focusing on changing employee expectations and how businesses can retain talent in an increasingly challenging market. Register here.Get the latest worldwide picture with our vaccine trackerSome good newsThe NHS in England says it is on course to become the first country in the world to stop new cases of HIV before 2030, thanks to a new wave of drugs, including long-acting injections to replace daily tablets. New drugs including long-acting injections offer the possibility of stopping new cases of HIV before 2030, says the NHS © AFP via Getty Images More

Some say the world will end in fire. Others in ice. But from looking at demographic trends in the developed world, I hold with those who favour stairlifts. Or, as Tesla chief Elon Musk puts it, “civilisation will indeed die with a whimper in adult diapers”. Richer states have ageing populations and lower birth rates. That isn’t all bad news: older societies tend to have lower levels of violence and political instability than younger ones. But they also have lower economic growth rates, and are not always good global citizens. The UK, for example, produces fewer doctors than it needs per head of population. Skilled professions like medicine will always be geographically mobile, but when meeting your own healthcare needs are predicated on poaching staff from poorer nations, it’s hard to claim you are a responsible or compassionate nation. More importantly, we should be preoccupied by the cause of the rich world’s falling fertility rates because we should assume it represents the future of our planet if, as we hope, the whole world continues to become wealthier, healthier and better educated. Some of the causes of falling fertility are obviously benign. In much of the rich world, the number of pregnancies carried to term in early adolescence is now so low as to be statistically insignificant. Globally, the proportion of young women who give birth before 18 is just 15 per cent. Given that maternal conditions are among the top five killers of girls aged 15 to 19 worldwide, this is an unalloyed positive, and it springs from greater reproductive freedom and easier access to contraception. But in the rich world, not all causes of falling fertility rates are as positive. In the UK, the introduction in 2017 of the two-child limit for child benefit claims was, according to the British Pregnancy Advisory Service, “important” in the decision-making of women. That has led many British left-wingers to argue that the country’s falling fertility rates are a result of its socio-economic divides. Small wonder fewer people are choosing to have children if they can’t afford homes and face heavy childcare costs. That makes intuitive sense, but some data suggest the fall in fertility in the rich world has proved resistant to greater spending on family incentives and other welfarist measures. In the UK, what is driving the fall in the birth rate is actually growing childlessness among the middle and upper classes. It’s true that household formation has slowed in Britain, but it is far from clear that this is primarily driven by poverty or inequality. According to analysis by the Office for National Statistics, degree-educated women are nearly twice as likely to remain childless as women without degrees. Given that women are the biggest driver of increased higher education participation worldwide, that suggests a very sharp increase in the number of childless households in the future. The real cause, I think, is not iniquity in the housing market or in the cost of childcare, but in the workplace. With a few happy exceptions, maternity is a terrible deal, economically speaking, for working women. Although there is a regrettable paucity of high-quality studies on this, I suspect the pattern we see in the UK data would be even starker if we separated the reproductive choices of women who are the family’s second earner from those who are the first. The rise of so-called “greedy jobs” — where your progress is closely linked to how much of your personal life you are willing to put on hold — is a further disincentive to have children. But some policymakers deny this is a problem: one minister recently told me they weren’t that worried about the remaining gender pay gap, because it was “just” a motherhood penalty. Of course, most people who have children will, not unreasonably, tell you that maternity is a great deal. In general, loss aversion is a powerful force in our decision-making. Someone who has a career they enjoy and who lacks a supportive employer will be reluctant to take it on trust that their hypothetical child will make up for the loss of income and prestige at work. The writer Richard Reeves has likened the economic impact of childbirth on the average woman to a “meteorite”. It is hardly surprising if women seek to avoid the collision. In the rich world, for now, this is a problem that policymakers can “solve” through immigration. But as wealth, education and prosperity spread, the only way to prevent global fertility rates from plummeting and to avoid the world ending in adult diapers is to make childbirth a better deal for professional women. We should start [email protected] More

Students at 150 UK universities face further disruption after lecturers and staff voted in favour of a national strike in an ongoing row over pay and pensions.The University and College Union on Monday said its members had broken the threshold of 50 per cent turnout required for strike action in two separate ballots.The votes mark the first time an education union has secured a mandate for a national walkout since laws curbing unions’ ability to call strikes were introduced in 2016 and come amid an intensifying cost of living crisis.They also set the stage for months of disrupted classes alongside further potential strikes in schools and colleges.Jo Grady, UCU general secretary, said university workers were “willing to bring the entire sector to a standstill, if serious negotiations did not start very soon”. “University staff are crucial workers in communities up and down the UK. They are sending a clear message that they will not accept falling pay, insecure employment and attacks on pensions.”UK universities have been locked in a dispute over pensions, pay and working conditions since 2018, with 10 days of strikes at the start of this year. Previously, individual UCU branches had to secure their own mandates to hold walkouts. But in this round of balloting, the union sought a mandate across all universities.In the ballot on pay and working conditions, 81.1 per cent of respondents voted to strike, with a turnout of 57.8 per cent among members at 145 universities. In a second ballot on pensions, 84.9 per cent of respondents at 67 institutions that participate in the Universities Superannuation Scheme voted in favour of walkouts, on a turnout of 60.2 per cent.The union will decide its next steps at a national meeting on November 3. The likely strikes will add to a wave of UK industrial unrest, as workers demand pay rises in line with inflation, which is at 10.1 per cent.While the three biggest teaching unions last week moved towards walkouts in protest at a funding squeeze, UCU members at further education colleges are already striking.The UCU called for a “meaningful pay rise” for all university staff in response to the cost of living crisis, saying they had been offered an increase of 3 per cent this year. It added that it wanted controversial cuts made to the USS scheme at the height of the Covid-19 pandemic to be reversed. Universities UK, which represents the sector and oversees talks on pension terms, said pension contributions were “at the very limit of affordability”.“Universities are adept at mitigating the impact of strikes on student learning, and so prepared for any further possible industrial action over the coming months.” More

The writer is director of economic policy studies at the American Enterprise InstituteDespite losing her grip on power after chancellor Jeremy Hunt reversed the tax cuts announced in Kwasi Kwarteng’s “mini” Budget, outgoing UK prime minister Liz Truss continued to argue for her vision of a high-growth economy during her final days in office. She was right to do so. For conservatives on both sides of the Atlantic, the wrong conclusion to draw from this episode would be to abandon supply-side economics. The correct lesson is that the supply-side agenda needs to be updated from the days of Ronald Reagan and Margaret Thatcher.Truss and Kwarteng were mistaken to give such a prominent place to individual income tax cuts. And ahead of the midterm elections in the US, the Republicans risk making the same error.Tax cuts are not as important today as they were four decades ago, when rates of taxation were much higher and more damaging to the economy. In the US, an optimistic analysis finds that reducing the top income tax rate from 37 per cent to 35 per cent — which some free-market conservatives would enthusiastically support — would increase the level of economic output by 0.2 per cent over the long run, an amount that would surely leave many tax-cut advocates disappointed. A 2005 analysis by the non-partisan Congressional Budget Office suggests that a 10 per cent reduction in all federal individual income tax rates would boost the level of economic output by less than 1 per cent over a 10-year period. The economy would grow because the cuts would increase incentives to work and save, but the analysis also assumes that the tax cuts would eventually be paid for. Since rising debt crowds out private investment, deficit-financed tax cuts deliver even less economic growth over the longer term.Even an aggressive and laudable revenue-neutral tax reform — lowering marginal tax rates and broadening the tax base by repealing tax deductions, exclusions and credits — would be likely to increase the size of the economy by 1 or 2 per cent, according to an analysis by the Joint Committee on Taxation. Rather than focus on individual income tax cuts, conservatives should look at other ways to boost the supply side of the economy. In the US, declining labour supply deserves much more attention than it gets. Boosting employment will grow the economy. Conservatives should champion an expansion of earnings subsidies to increase employment, along with supply-side reforms to the childcare sector, making care more available while reducing its price and helping more parents to hold down jobs. Modern supply siders should also recapture immigration policy from culture warriors. Over the long run, more immigrants mean more workers, more entrepreneurs and a more dynamic, faster-growing economy. They would bring immediate benefits as well, by easing the current labour shortage.Improving skills through well-designed training programmes would spur economic growth by increasing productivity, along with boosting workers’ wages. The American education system fails too many children. It should be clear that the US needs a longer school day and a longer school year. Better-educated students become more productive, higher-wage workers. Conservatives should continue to push for reducing tax rates on corporate income and encouraging the full deductibility of new business investment, which would lead to faster productivity and wage growth. Policy should also increase incentives for research and development spending, and provide additional support for basic research. New inventions and innovations fuel longer-term, lasting prosperity.Some of these policies were in the UK’s ill-fated “mini” Budget, and conservatives in the US and Britain should not overlearn the lessons from Truss’s failed premiership. Uncertainty driven by tactical errors and poor communication from the prime minister, the government’s decision to cut out the Office for Budget Responsibility, a failure to specify spending reductions to balance tax cuts and missteps by the Bank of England all led to a credibility crisis that saw the pound fall while gilt yields rose. American conservatives, who have become increasingly enamoured with protectionism and industrial policy, should not be persuaded by Truss’s fall to move even further from their supply-side roots. Giving select industries special treatment is a lose-lose, reducing employment in those industries and lowering the overall growth rate. But the correct alternative isn’t additional deficit-financed individual income tax cuts either.Instead, conservatives should pursue a growth-and-participation agenda that would increase the size of the workforce, boost investment, make workers more productive and increase innovation and dynamism. This agenda would lead to more output and higher incomes — and would give more Americans the dignity, purpose and identity that come from earned success. More

HANOI (Reuters) – Vietnam’s central bank on Monday said it would raise its policy rates by 100 basis points, the second increase in a month, in an effort to head off inflation risks.The refinancing rate will be raised to 6.0% and the discount rate to 4.5%, the State Bank of Vietnam (SBV) said in a statement. It also said it would raise the cap on dong deposit rates at commercial banks to 50 bps to 100 bps depending on maturities. More

BEIJING (Reuters) – China’s next premier, who will take office in March, will have few options but to step up stimulus to revive an economy ravaged by COVID-19, policy insiders and analysts said on Monday, as the unveiling of Xi Jinping’s new leadership team rattled markets.On Sunday, Xi was confirmed for a precedent-breaking third term as president and introduced a Politburo Standing Committee stacked with loyalists including Li Qiang, the Shanghai Communist Party chief who is now in line to succeed Li Keqiang as premier.Li Qiang will have the job of driving growth to fend off widespread job losses that could undermine social stability, at a time when Xi is putting ever more emphasis on security. He will inherit an economy, the world’s second-largest, that has been dragged down by strict COVID curbs and a deepening property crisis, while hopes for any meaningful reforms have diminished as the ruling Communist Party tightens its grip on the economy.On Monday, Hong Kong stocks tumbled, Chinese stocks fell and the yuan weakened after the new line-up of China’s top governing body heightened fears that Xi will double down on ideology-driven policies at the cost of growth. “The COVID curbs will not be loosened sharply anytime soon, the property sector won’t pick up in the near term, the pro-reform camp has been completely wiped out, hitting the confidence of investors,” a policy source said on condition of anonymity.”The new economic team will have few options but to resort to sizeable stimulus next year to support the economy, focusing on investment and big projects,” the source added.China’s economic tsar, Liu He, a U.S.-trained economist who is seen as the brains behind earlier reforms, will be replaced by He Lifeng, another Xi acolyte. The pro-reform central bank chief, Yi Gang, is likely to step down when he hits the mandatory retirement age in 2023, Reuters reported.Li Qiang’s elevation surprised many policy insiders who pointed to the botched handling of a Shanghai COVID-19 outbreak that led to a two-month lockdown of its 25 million people, and his lack of experience in a national-level economic role.”What we should do urgently is revive the economy,” Jia Kang, former head of the finance ministry’s think tank who runs the China Academy of New Supply-Side Economics, told Reuters.”We face the problem of weakening expectations and confidence and it’s empty talk if we cannot revitalise the economy,” Jia said.MOUNTING CHALLENGESXi’s push for a state-led economic model at the cost of market reforms could jeopardise his long-standing goal of turning China into a great global power by the middle of the century, policy insiders and analysts said. China’s economic miracle started in 1978 when Deng Xiaoping kicked off historic reforms, allowing more private enterprises and opening the economy to foreign investment.”With national security elevated to the highest-ever level amid rising geopolitical risks, how to strike a balance between development and security could be one of the most important questions for the leadership in coming years,” Citi analysts wrote after Xi unveiled his new team.After official data on Monday showed a faster-than-expected recovery in the third quarter, investors will look for key policy agenda clues from a Politburo meeting and the annual Central Economic Work Conference, both of which are expected in December.In September, China’s surveyed urban jobless rate nudged up to 5.5%, the highest since June, as COVID curbs squeezed businesses, with the unemployment rate for job seekers between 16 and 24 at 17.9%.China is on track to miss its annual growth target of around 5.5% – the latest Reuters poll forecast 2022 growth at 3.2%. The poll showed China’s growth could pick up to 5.0% in 2023, helped by a lower base.Xi’s Standing Committee choices disappointed investors who had been hoping he would keep some reform-minded officials, including former Guangdong party boss Wang Yang.”There is likely to be more deference to Xi Jinping’s own views about how to move the country and the economy forward,” Alvin Tan, head of Asia FX Strategy at RBC Capital Markets in Singapore, said. More