Riots, drought, social instability: Emerging markets are never easy. Now investors face a potentially bigger test - they must decide whether President Xi Jinping's determination to remain in power in China is a risk-on or risk-off moment for the whole asset class. The Communist Party is set to repeal presidential term limits this month in a step that would allow the 64-year-old to rule beyond 2023, and perhaps for life. One potential positive for investors is that the calculation of political risk in China becomes much simpler. Guanxi, or connections, has long played a key role. Companies associated with the political families of former leaders Deng Xiaoping, Jiang Zemin and Wen Jiabao have flourished. Anbang Insurance Group Co., whose chairman Wu Xiaohui was married to one of Deng's granddaughters, quickly rose to become China's third-largest insurer by selling as much as 87 percent of its products through bank channels. Competitors, lacking that short-cut, had to deploy the standa...

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