The announcement that China will drop term limits on the presidency clears the way for Xi Jinping to rule the country indefinitely. Markets initially welcomed China’s plan to change its constitution, and many analysts say the political certainty should be mostly positive for Chinese assets as it bolsters the Xi’s ability to drive through policies, such as deleveraging, proper economic reform, and anti-pollution campaigns. The absence of checks and balances, however though, raises the risk of policy errors and making too many financial moves solely for political, faction pleasing reasons, and not sound business reasons.
In the short-term, the White House says China's proposal to abolish presidential term limits is an internal matter for Beijing. "I believe that's a decision for China to make about what's best for their country," press secretary Sarah Huckabee Sanders said at a Monday press briefing.
However, in the long-term, I suspect the American think-tank and Old China Hand community will be more critical of this Chinese policy decision, thus forcing more friction between America’s corporate multinationals and the Federal government institutions tasked with managing the US-China relationship.
Marc A. Ross is the founder of Caracal Global and specializes in global communications and thought leader management at the intersection of politics, policy, and profits. Working with boardrooms and C-Suite executives from multinational corporations, trade associations, and disruptive startups, Marc helps leaders create compelling communications, focused content, and engaging presentations.