Xi Jinping鈥檚 all-but-certain installation for a third term as leader of the Chinese Communist Party marks an important milestone in the party鈥檚 progress toward annexing Taiwan. That creates significant risks for US investors鈥攎any of which have been overlooked.
Mr. Xi has unambiguously stated that reacquiring Taiwan is a pillar of his national rejuvenation platform and a vital national objective. It鈥檚 also critical to his personal legacy. Mr. Xi鈥檚 ambitions have been checked by his need to secure a third term, as he likely feared international backlash that could threaten his grip on power. After this month, his calculus may change. Taiwan鈥檚 annexation could allow him to assert dominance and divert attention away from China鈥檚 domestic problems. Mr. Xi may be disinclined to wait, given the risk of a more assertive president in Taipei in May 2024 or Washington in January 2025. Beijing鈥檚 recent rhetoric has been consistent with this hypothesis.