Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Never Mind Obama and Romney; Watch for Jinping and Keqiang

Tuesday, November 6th, 2012
By for Profit Confidential

economic recoveryIn my last article, I discussed the implications of the presidential election that is set for today. As I said, whoever wins the trip to the Oval Office tonight will be critical not only for determining the direction of the country on both the political and economic fronts, but also for determining the direction of foreign policy, especially given the recent transformation of China into center of world power.

Not only is the presidential election of significance here, but what will be happening in China on Thursday will also help to dictate the direction of the world’s economic and political power over the next decade and beyond. The 18th National Congress of the Communist Party of China will take place this Thursday, witnessing the power transfer in the communist party that occurs every 10 years.

For China, the change at the helm comes at a critical juncture, as the country’s economic recovery is currently stalling following years of explosive GDP growth that propelled the country to overtake Japan and become the world’s second-largest economy.

While who the new Chinese leaders will be has not been disclosed, the speculation is that the new leaders named in two days will be Xi Jinping and Li Keqiang. Jinping, the present Vice-President of China, is expected to become the country’s next president, replacing Hu Jintao. Keqiang, the current Vice-Premier, is expected to become the country’s next premier, replacing Wen Jiabao.

Of course, the new leaders will bring some youth and fresh ideas to how China will be over the next decade until the next round of leaders.

At 59 and 57 years of age, Jinping and Keqiang will hopefully have a better understanding of the new world realm, especially given the rise of China and its major role in world politics. China is the world’s top manufacturing power, given its sweatshops and cheap labor. The country is also becoming the world’s major buyer and user of resources.

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Moreover, in a key development that the rest of the world will surely monitor, China’s build-up of its military has been something to behold. The country recently realigned its military’s leadership, which many feel is a strategic move to reinforce the leadership and put into place a structure that will lead the country’s military into the next decade. China is clearly asserting itself as the military and economic superpower in Asia, supplanting Japan, which of course, is in a mess. (Read my thoughts on this in “Japanese Economy Remains in a Comatose State.”) The current China-Japan conflict regarding the Senkaku or Diaoyu Islands in the East China Seas reflects the new boldness of China. Of course, it doesn’t help that there is speculated to be oil in the ocean near the islands.

Whether President Obama or Governor Romney wins tonight, the real story that could impact the direction of the world over the next decade may be focused on Jinping and Keqiang, as the superlative growth in China as a world power could accelerate.

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George Leong - Financial Planner, ConsultantGeorge Leong, B. Comm. is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services. Add George Leong to your Google+ circles