China's Xi Jinping Is Bullishly Mugged by Reality

Markets always and everywhere have their say. Much as political types imagine they can use force or the money of others to alter reality, market signals overpower their conceit. This truth was bullishly revealed yet again in Asia yesterday.

Over the weekend Xi Jinping secured for himself a third five-year term as general secretary of the Communist Party. Hong Kong’s Hang Seng Index promptly plunged 6 percent on Monday.

Why is this bullish? It is because it’s a loud reminder to China’s would-be leader for life that actual market signals pay homage to no one. Investors don’t trust Xi, and this truth was expressed in powerful fashion.

What don’t they trust? Readers can probably guess. Markets are a look into the future, and over the weekend it became official that Xi and those in his inner circle had consolidated power. Getting more specific, a report from the Wall Street Journal explained that Xi et al “have broken with the pro-market pragmatism of past decades to champion a more egalitarian society, greater state control over the economy and an increasingly muscular foreign policy.”