Posted by: beaufortninja | June 12, 2012

Political Turmoil in China

Despite government assurances that everything is under control, recent events have shown that they are in fact, out of control. China watchers are familiar with Bo Xilai, the corrupt and overly-ambitious party boss of Chongqing. He’s been accused of “misplacing” up to $1 billion in taxpayer money, political maneuvering in order to become the next Chairman of China, and his close relationship to several high level military officials has made the central leadership wary of his intentions. In addition to this, he’s complicit in the murder of a British businessman who was killed by Bo’s wide after a disagreement in a money laundering deal.

After he was sacked, rumors then swirled that there was a military coup in Beijing with citizens claiming to see tank columns rolling down the streets in the middle of the night and hearing sound of gun battles throughout the Zhongnanhai government district. While there is conflicting evidence of combat between government forces and soldiers loyal to Bo Xilai and his supporters, the Communist Party’s heavy-handed tactics used to stifle the online gossip has only increased the people’s doubt in the party’s leadership. Methods to quell gossip even included virtually shutting down China’s most popular micro-blogging site, Sina Weibo, and preventing people from making comments as well as catching those you spread the coup rumors.

And even after the government assured the people that there would be no purges in response to the ousting of Bo Xilai and his followers, there are still some cloak and dagger schemes being enacted out of the public eye. The most notable of which is the suspicious death of top People’s Liberation Army Lt. Gen. Ruan Zhibo. The Deputy Commandant of the Chengdu military region, Ruan was also the PLA’s top accountant and was previously the chief auditor during his service in Beijing. A man with Ruan’s position and income level dying at the relatively low age of 63 seems incredibly unlikely when his close ties to Bo Xilai are examined and there are whispers that it may have been a political assassination.

No one’s going to be challenging the CCP’s authority when ambitious Party Boss’s are being locked up and PLA generals are getting blown away.

However, contrary to the image of harmony and stability that the CCP likes to project to the world, one look at China’s 5,000 year history will show you that the country is and always has been a political tinderbox. The history is chock full of rebellions and revolutions and the current regime is no different than any other that has come before it. One hundred years ago, the country was divided into the control of various warlords. Today, the country is being fought over by the myriad of political factions inside the CCP. Rather than united for the betterment of their country, the factions, each led by a princeling, children of the revolutionary vanguards from the Chinese Civil War, jostle for position and seek more money and recognition for their groups. Whereas the chairmen once had supreme authority over the entire country, more and more attention must be paid to the princelings and important decisions often must meet with their approval before being carried out, since it’s these groups that the chairman’s political survival depends on.

And yet, all of their positions have become increasingly tenuous. The princelings and other high party officials have reaped untold rewards from the explosive economic growth. But there are already signs that th good times may be fast approaching their end. Goldman Sachs recently published a report that estimated China’s credit debt to GDP could be as high as 190%, most of the investments the credit is financing have low or negative profitability, housing prices in major cities have fallen this year, the rate of deposits in state-owned banks has done down, it’s suspected that capital reserves are starting to leave the country, and banks are being forced to loan money to each other. All this is only made worse by the factions’ fevered and undisciplined investment habits, each wanting to throw more money at their pet projects to keep their districts growing.

With no strong central authority to reign in the higher officials and their factions, confidence that the party can steer China through the economic trouble ahead is beginning to wane. History repeats, and if that is any indication then it appears as though the Chinese Communist Party is much less secure then they would have the people believe.


  1. Wow, great commentary. The things we don’t know…
    Keep us posted.

  2. China’s economic growth is rapid, but its political environment has much room to improve.

    • We’ll see how things go. Rampant corruption and an overly-cautious approach to decision making might make things take a turn for the worse with the government.

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