Updated July 3 at 5:00pm in Hong Kong.
Chinese president Xi Jinping’s signature governing style has been to consolidate power and then wield it aggressively and independently.
He’s destroyed political opposition within his own party by locking up Bo Xilai and Zhou Yongkang, once rumored to be against his ascension, for the rest of their lives. Xi’s much-touted anti-corruption drive has been a vehicle to practically wipe out their supporters, and his opposition, from the Communist Party altogether.
He created a new National Security Commission, which he heads, then passed a wide-ranging national security law that has been called “neo-totalitarian” for the authority it gives the government over everything from culture to space to the internet.
But… the stock markets. Despite government attempts to prop them up in the form of urging investors to stay in the markets, loosening monetary controls, stock buying by state-owned banks and oil companies, and various other measures, they are just not falling in line.
The Shanghai Composite Index fell over 5% in early trading in China on Friday, below the crucial 3700 level, recovered briefly and then closed down 5.77%. The index has closed down three days in a row, worsening a painful bear market that is sure to take a toll on an already-slowing Chinese economy.
What the political fallout could be for Xi is anyone’s guess right now. Many Chinese citizens believe the strength of the men in power and the strength of the stock markets are closely tied. As one investor told Quartz, “How far the stock market can go depends on how good the leadership is.”