Here’s a paragraph that I wrote in the context of discussion repo rates in China…. I’m trying to imagine getting into a time machine and going back to 1992 and telling people then that in 15 years, the world’s investment banks will be paying a huge amount of attention to the next Party Congress of the Chinese Communist Party………
One other note. I doubt there will be any major economic moves before the party congress in mid October. In particular, the next party congress will be where we will likely see the China Investment Corporation unveiled. CIC represents a major restructuring of personnel and power relationships, and those just will not be formally finalized until the party congress convenes. At this point the details of CIC are likely to have been set up, but there is likely to be some huge back room negotiations over the details.
If RMB revaluation needs to be coordinated with capital outflow policy, this means that nothing interest is also going to happen before the party congress. The upcoming party congress also probably accounts for the huge numbers of IPO’s that are in the system right now. All of the major state owned enterprises have to have their boards and executive staffs approved by the Organization Department of the Communist Party, which means that they couldn’t go IPO too far in ahead of the upcoming Party Congress.
Stepping back a bit, and thinking about what I just wrote. I have to say that we are living in a very bizarre world.