The widely watched 19th Party Congress has ended, and the result is as largelyanticipated. As we discussed in our preview to the Party Congress, “We don’texpect much from the meeting itself, as it is mainly about personnel changes atthe top level, not a place to introduce new reform plans. For the financialmarket, what happens before and after the meeting is much moreimportant than what happens during the meeting.”Indeed, over the past two years the Chinese economy has been overshadowedby the Party Congress, as policy makers have put stability as the top priority.    Meanwhile, the next few months will be the window for top leaders to disclosetheir strategies for the next five years.    With political power being much more consolidated than five years ago, now thechallenge for top leaders is to justify that power by continuing to delivering ontheir key mandate: the Chinese Dream (ie, to make China great again). To dothat, they need to overcome two potential traps: the middle-income trap andthe Thucydides trap (ie, managing a peaceful rise as a great power).    Let’s focus on the economy. In June 2016, we published a thematic report,“China’s Debt: Myths and Realities.” In the first part of the report, we argued thatChina's debt risk is much lower than the prevalent views. However, in thesecond part we also discussed why China’s economy could fall into a “middleincometrap” due to the severe capital and land misallocations in the system.    In any case, a critical point post the Party Congress will be the CentralEconomic Work Conference, which will be held in December. Below aresome thoughts from us on the potential areas for reforms.

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