xi jinping has been confirmed for a third fiveyear mandate as chinese communist party general secretary were he to complete his third term he would become the longestrunning paramount leader since mao zedong the news sent shockwaves across china’s stock market in one day the countrys domestic equity market saw foreign investors pull out more than 25 billion the market’s reaction is one of rejection due to xi’s growing posture as a totalitarian and inviting newlyminted fears of a maolike figure with a cult of personality built around him these traits dont bode well for a globalized frictionless economy that allows trade to flow freely and predictably which global markets tend to favor see also alibaba plummets following xi jinpings reelection the politburo standing committee is the chinese communist party’s ruling body composed of seven officials that harness the country’s core political power in one room with xi jinping on the top “xi’s wartime cabinet is in place” kyle bass founder and chief investment officer of hayman capital management said on twitter the committee is fully composed of xi loyalists three members carried over from the previous committee among those excluded was premier li keqiang whose views on market reform contrasted with xi’s observers noted that the new committee is more focused on preparing china for military conflict than economic growth “national security and the party’s political security is clearly a higher priority than achieving high rates of economic growth” drew thompson a researcher at the national university of singapore said to the new york times according to hayman capital’s bass the committee’s appointees clearly illustrate the country’s deprioritizing economic objectives in favor of a militaryoriented readiness xi “sacked the only three men with markets experience” from the committee he said the removals also replicated into china’s politburo and the central committee the second and third ruling bodies in order of priority after the allpowerful politburo standing committee some include   yi gang the head of the peoples bank of china   liu he director of the central financial and economic affairs commission   guo shuqing head of the china banking and insurance regulatory commission financiallysavvy members of the previous committees were removed in favor of militaryoriented officials including two commanders that serve as xi’s vice chairmen on the central military commission general zhang youxia and chen wenqing the minister of state security “these moves send a clear message to the world that conflict and ‘great struggle’ are coming soon” bass says impact on the markets from china to the world “today’s 1020 crash in chinese shares is just the beginning of the destruction of western capital invested in chinese companies” bass wrote after xis reelection alibaba group holding ltd baba plunged 20 off friday’s closing price at one point monday before bouncing up about 6 from the lowofday the chinese multinational tech company plummeted in tandem with a number of other chinabased stocks in the tech sector diana choyleva of enodo economics echoed other analysts by saying in the wall street journal that for xi “ideology and national security trump all other considerations including growth” this means that china’s open market mentality is shutting down in order to protect its own domestic interests with a steadier grip that can lead to increased isolation and exacerbated tensions with its trading partners inducing the us monday’s selloff of american depositary receipts from chinese companies is probably the latest chapter in a trade war that became palpable during the trump administration and is now leading us capital further away from the chinese economy and viceversa “these outflows will now likely become a torrent” robin brooks chief economist at the institute of international finance wrote on twitter citing how western money is flowing out of chinese companies xi seemingly spoke out of both sides of his mouth in a speech last week that china wants peaceful reunification with taiwan yet will never promise to give up the use of force and reserve the option to take all necessary measures taiwanese president tsai ingwen’s office for its part reiterated that war is not an option the country will continue to defend its national sovereignty he said both uschina tensions and conflicts around taiwan’s sovereignty are bad news for the semiconductor sector mark liu chairman of the taiwan semiconductor manufacturing company tsm said that the uschina trade conflict and the escalation of crossstrait tensions have brought more serious challenges to all industries including the semiconductor industry the company’s stock was down 7 in the past 5 days as news of xi’s tightening grip on power became more evident china’s semiconductor manufacturing market also comes threatened by a 52 billion federal program to boost the us’ chipmaking capabilities launched by president joe biden in august the chips and science act of 2022 bars companies from procuring federal funding for materially expanding production of chips more advanced than 28nm in china or a country of concern like russia for ten years benzinga’s take tsm and chipmakers like intel intc and samsung electronics co ltd otcpk ssnlf could benefit from the chips act while causing turbulence for chinese chip manufacturers however a more macrohostile environment could be bad news for tech stocks invested in good chinaus relations research from venture capital firm loup funds shows   apple inc gets 18 of its revenue and about 85 of its manufacturing from china   tesla inc gets about a quarter of its revenue from the country   75 of products sold on amazoncom inc are from china   microsoft corp gets about 2t of its revenue from china   alphabet inc and meta platforms rely on china less for revenue but for for manufacturing hardware we do business on both sides of the strait so we cant listen to the us and not do any business with mainland china then what would everyone eat said frank huang chairman of powerchip semiconductor manufacturing corp headquartered in taiwan as china doubles down on showcasing its strength as a military powerhouse taiwanese chipmakers become caught in the global power game the outcome continues to be unknown but instability in international relations will likely come with volatility in the equities market