Action Timeline

Immediate: Monitor upcoming personnel changes at the CMC following the September 3rd military parade and the Fourth Plenum for signals on Xi's priorities and potential successors. Assess supply chain stability if reliant on Chinese defense contractors.
Short-term: Evaluate the impact of leadership changes on China's military modernization timelines and procurement strategies. Companies may need to re-engage with newly appointed officials.
Long-term: Observe how Xi's consolidation of power and potential emphasis on loyalty over expertise affects the PLA's long-term strategic capabilities and willingness to engage in aggressive regional actions.

Risk Assessment

The purges contribute to an atmosphere of uncertainty, potentially increasing market volatility for Chinese equities and related global markets.
High turnover in senior military leadership could lead to temporary disruptions in military planning, operations, and procurement processes, impacting companies with defense contracts.
Geopolitical instability, particularly concerning Taiwan, could be exacerbated by internal military flux, leading to miscalculations or escalations with significant global economic repercussions.

Key Indicators

The selection of new members to the Central Military Commission will be a critical indicator of Xi's priorities for the PLA and his consolidation of control.
Visibility and placement of specific generals during the September 3rd military parade will signal their current standing and potential future roles within the military hierarchy.
Continued high defense spending, potentially driven by modernization efforts and geopolitical tensions, will indicate the trade-offs China is making in its economic and strategic planning.

Regional Perspective

The unique perspective from China is Xi Jinping's deep-seated distrust, extending even to generals he personally promoted. This suggests a leadership environment where loyalty and personal connection are paramount, creating significant internal instability and potentially impacting the PLA's operational effectiveness and strategic decision-making, particularly concerning regional flashpoints like Taiwan.

Immediate Implications

The disappearance of key figures, such as former CMC Vice Chairman He Weidong, raises immediate questions about the readiness and strategic planning for potential conflicts, including operations related to Taiwan.
The upcoming personnel appointments at the CMC represent a time-sensitive opportunity to gauge the direction of China's military leadership and identify key decision-makers for engagement.

What to Watch

The appointments to the Central Military Commission in the upcoming plenum will be a key development to monitor.
Statements from Chinese military and government officials regarding readiness and modernization plans will be crucial.
The market's reaction to any further high-profile removals or appointments within the PLA will provide insight into investor confidence.