China's Xi Jinping offers strong words but no new reforms

Asian markets have tumbled after a much-anticipated speech by Chinese president Xi Jinping failed to deliver.

Xi Jinping was giving a speech marking 40 years since China began to open up its economy. In that time, the economy has boomed to become one of the world’s biggest and a core driver of global growth.

But with that pace of growth now slowing and China embroiled in an increasingly bitter trade war with the US, traders worldwide were hoping Xi would use the speech to detail future plans for the economy, including how Beijing could cut debt, boost consumer spending and even pull back some state control.

Some were also looking for discussion on how relations with the US could be improved.

However, the strongly-worded speech did not detail economic reforms and instead focused on China’s successes to date. He also warned that other countries should not “dictate” to Beijing.

“No one is a position to dictate to the Chinese people what should or should not be done. We must resolutely reform what should and can be changed, we must resolutely not reform what shouldn’t and can’t be changed,” he said.

Equities across Asia fell following the speech, with the Hang Seng Index closing 1.05% lower at 25,814, the SSE Composite Index down 0.82% at 2,576, the Nikkei 225 off nearly 2% at 21,115 and the Topix losing 2% to close at 1,562, its lowest point since May 2017. Base metals – which have long benefited from China’s extensive spending on infrastructure – also tumbled.

James Lawler, head of research at London Capital Group, said: “Xi Jinping has his failure to mention any reforms or stimulus, in a speech hailing China’s opening to the world, saw Asian markets hit their nadir.”

Analysts at SP Angel said that Xi’s speech “was short on detail and long on political self-congratulation and has the potential to further destabilise markets. Xi focussed on the supremacy of the ruling Chinese Communist party in a speech designed for a domestic audience”.