Merkel in the running for a fourth term as Chancellor of Germany. There are no term limits. However, in the past, Merkel was critical of her predecessor and mentor Kohl for outstaying his welcome. Social Democrat Schulz is mounting a serious challenge. Her immigration stance, the seemingly light domestic agenda, and voter fatigue may make this her toughest challenge yet.
Most of her tenure has been in a coalition government with the SPD. Schulz is running against not just Merkel, but also the shift in the SPD beginning with Schroeder's labor market reforms. Schulz represents the left wing of the SPD. Even if Merkel is ultimately successful in securing a fourth term as Chancellor, it makes sense for medium and long-term investors to be contemplating a post-Merkel Germany and Europe.
Prime Minister Abe in Japan and President Xi in China are in a somewhat different position. In Japan, with few exceptions, the head of the LDP is the prime minister. The limit on Abe was that as party head. There was a two-term limit. However, over the weekend, the LDP modified its rules to allow a person to be head of the party for three terms.
The next general election in Japan is scheduled for late next year. Within the LDP, some suspect that Abe may be challenged by the Governor of Tokyo Yuriko Koike, who was the defense minister in Abe's (recent) first term. Abe's support has risen in recent months. Navigating a relationship with the new US president (even after formally withdrawing the US from TPP talks) has been as successful as any foreign leader.
China is a different kettle of fish. There is rule dubbed seven up, and eight down that is thought to govern the process. This means that if one is 67 when a new term begins, one can still stand. However, if one is 68, they should retire. However, this rule is informal and not cast in stone. It was flexibly used by former President Zemin to get rid of a couple of rivals.
President Xi previously indicated that the retirement rules were not absolute. President Xi will be 68 years old at the end of his second term. However, given his consolidation of power, there are suspicions that he may test the waters for a third term. The focus of such a test is Wang Qishan; he led the antic-corruption campaign. He has served other key positions, including heading up party discipline, Deputy Prime Minister and Mayor of Beijing. He will be 68 and would be subject to the seven up and eight down rule.
However, there is much speculation (although we have discussed this possibility in our 2017 outlook pieces) and it made it to the front page of the New York Times over the weekend. At the National People's Congress, Premier Li cited Xi as core leader several times in the same speech. There has been a rough balance of power in China between two factions, the so-called princelings, whose fathers and/or grandfathers fought alongside Mao and the Communist Youth League. Xi is a princeling, and Li is from the Communist Youth League.
Xi has been critical of the Communist Youth League and has sought to limit its relative independence. There are some that think Xi's concentration of power jeopardizes this balance. There is some speculation that Xi may seek to replace Li with Wang later this year.
Besides shaving this year's growth target to 6.5% or higher from 6.5% to 7.0%, the National People's Congress also modified its characterization of the yuan. Previously, for the past three years, the line was that the goal was keeping a "stable yuan at a reasonable and balanced level." The new line is "ensuring the stable global status of the yuan."
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