Beijing is preparing to host a major military parade on September 3rd, commemorating the 80th anniversary of the end of World War II. Observers suggest that this parade, despite its scale, cannot hide the internal challenges related to military corruption and a power crisis at the highest levels.

Analyses indicate that the Central Theater Commander, traditionally responsible for leading the parade, may be in a precarious position, presenting authorities with difficulties in finding a suitable replacement in time. Unusual personnel changes in the leadership responsible for Beijing's defense are also causing growing concern.

Market Signals

Defense Industry: The parade will showcase the latest domestic weaponry, including hypersonic missiles and drones. This reflects China's commitment to strengthening its defense industry and its ambition to surpass competitors.
Iron Ore and Steel Markets: Authorities have imposed production cuts in steel-producing regions to ensure clear skies over Beijing. This has led to temporary fluctuations in iron ore prices, limiting the overall impact on demand.

Winners & Losers

Winners: Chinese defense manufacturers, suppliers of high-grade iron ore. Losers: Companies dependent on Chinese steel production, and investors who rely heavily on China's political and economic stability.

Action Timeline

Immediate: Monitor potential leadership changes within the Chinese military.
Short-term: Assess the impact of steel production cuts on global supply chains.
Long-term: Study developments in the Chinese defense industry and their impact on global defense spending.

Risk Assessment

Geopolitical Tensions: The parade, with its display of military might, could escalate tensions with Western nations.
Market Volatility: Internal political instability can increase market volatility.
Supply Chain Disruptions: Any escalation of environmental or political policies could lead to broader supply chain disruptions.

Key Indicators

Further Personnel Changes in PLA: Any additional reports of high-level dismissals or leadership reshuffles within the PLA would be a strong indicator of ongoing internal dynamics.
Focus on Military Modernization: China's continued emphasis on achieving military modernization goals by 2027 and 2049 will be a key indicator of its long-term strategic ambitions.

Regional Perspective

Highlighting the challenges in appointing a parade commander and the unusual personnel changes in Beijing's defense forces.

Immediate Implications

What happens next: Await the announcement of the parade commander and the future movements of military leaders.
Time-sensitive opportunities or risks: Assess the impact of internal stability on military and economic strategies.

What to Watch

Leading indicators: Any further changes in the military leadership structure.
Expected next developments: Formal announcement of the parade commander and the next steps in military modernization.
Key decision points: How China responds to potential internal challenges.

Analysis

The difficulty in finding a commander for the military parade suggests potential internal turmoil within the Chinese military, which could affect military readiness and political stability.