Uwe Parpart, chief strategist at Capital Link International, said the 19th Party Congress provides good assurance on China’s ability to deleverage debt loads to the benefit of China’s top four banks.

Parpart explained that strong industrial profits created an environment that was good for China’s banking system.

“The industrial profits in China are very good. They had the highest profits in 10 years or so,” he said. “That by itself provides natural deleveraging of the corporate balance sheet. That’s a good process and it’s also what Xi Jinping and his reformers want.”

“It’s good for the banks,” he explained, adding that if an investor had bought China Construction Bank during the 19th Party Congress the investment would have increased by 5%.

Parpart, who is also the Editor of Asia Times and a principal investor, was appearing on CNBC’s Squawk Box.