Chinese Instability?

Some commenters have noted that it is not necessarily a good idea to buy equities in a nation that is about to become a global superpower. And so it was following the 1929 crash as Britain descended, and America — encumbered by a historic depression — ascended. Certainly, investors buying equities in 1929 might never have recovered their purchasing power until the 1960s:

So while China is ascendant, and arguably — on the strength of being the spider at the web of global trade, the biggest consumer of oil, its huge foreign exchange reserves, and (most importantly) the globe’s major productive base — already pulling ahead, things might well still be volatile for China. Certainly, it seems a volatile time for many Chinese; the nation lacks a public healthcare system, workers are frequently injured or killed in industrial accidents, air quality is often poor, pollution is still rampant and free speech is still an utterly alien concept. But on the other hand, they are blessed with very high rates of growth backed by very high rates of growth in real productivity, high levels of saving, and low levels of net debt.

And it seems like a recent schism in China’s leadership could worsen matters.

From the Washington Times:

U.S. intelligence agencies monitoring China’s Internet say that from March 14 to Wednesday bloggers circulated alarming reports of tanks entering Beijing and shots being fired in the city as part of what is said to have been a high-level political battle among party leaders – and even a possible military coup.

The Internet discussions included photos posted online of tanks and other military vehicles moving around Beijing.

The reports followed the ouster last week of senior Politburo member and Chongqing Party Secretary Bo Xilai, who was linked to corruption, but who is said to remain close to China’s increasingly nationalistic military.

Chinese microblogging sites Sina Weibo, QQ Weibo, and the bulletin board of the search engine Baidu all reported “abnormalities” in Beijing on the night of March 19.

The comments included rumors of the downfall of the Shanghai leadership faction and a possible “military coup,” along with reports of gunfire on Beijing’s Changan Street. The reports were quickly removed by Chinese censors shortly after postings and could no longer be accessed by Wednesday.

While it is impossible and foolish to try and draw larger conclusions from these snippets of information, it is fairly safe to say that if true, Western leaders — spooked by the various authoritarian Eurasian and pro-Chinese governments who have ditched the dollar for bilateral trade — will be keen to see some of the spirit of the Arab Spring on the streets of Beijing. Of course, American commentators may not be so happy if a radical protectionist anti-American faction of the military — intent on defending Iran from Israel, and exporting less goods and components to the United States — takes control of the nascent superpower. 

But such a military coup seems very unlikely. The likeliest view is that this is simply the inevitable ouster of a Communist Party figure who simply didn’t fit in, in a country where for the political class fitting in is still exceedingly important.

16 thoughts on “Chinese Instability?

  1. I was surprised to learn who … or should I say what group of people were the instigators of the communist revolution in russia. They were previously kicked out of the russian empire by the Tsars, only to come back and subvertly oust the Tsar via the revolution.

    Since the ruling party in China is still communist in nature, it helps to understand how the entire movement started and who started it. Doesn’t answer any questions, but it sure raises some interesting ones.

    • Those people who started the revolution in Russia had some Wall Street support. I can only imagine that a lot of opposition groups in China today do also.

      • So you think the chinese communist party somehow diverged from “wall street support” these last few years, and they are now looking at bringing it back in line perhaps?

        I’m just confused by one thing re: “wall street support”

        If: 1. the arab spring revolutions were influence by “wall street support” and 2. the new leaders of the arab spring countries oddly appear to be even more entrenched muslim fundamentalists (muslim brotherhood, etc), then would that not mean that “wall street support” is attempting to polarize the international sphere? If so, why?

        Do you not find it odd that Putin appears to be behind Iran, while his lifelong mentor was a Rabbi?

        A few things just don’t make sense to me

  2. We in the USA used to have morals. A clear example of these morals was in the 1980’s, when the public found out about the textile industry sweatshops around the world and vowed to not buy that brands clothes until the producers fixed the problem.

    Today the company Apple, has a cash hoard of a bajillion dollars and they couldn’t raise the pay for their Foxconn factory workers? A mean jeez, people don’t jump out of windows to their death at work because there was no creamer for their coffee that day.

    The example of Apple and their Chinese workers/contractors is what worries more then anything. People talk, word gets around, memories are long and eventually China is going to be the big dog in the yard and kick every other poodles rear end. We in the USA should take heed and pay those folks a bit more or they will learn from their masters and the day will come when Chinese companies erect nets on American buildings.

    PS A Chinese entrepreneur will start a company to design and manufactor these nets (In the USA) and make a fortune. The ticker symbol CTCH.

    • Nope, AAPL prefer a dividend. Hedgies are more important to AAPL’s business than FoxConn wage slaves.

      It is possible that the ideology of communism really began to die in the West when we ceased be an agricultural/industrial society.

      Now that China (a supposedly “communist” nation) is the great industrial power, will the FoxConn worker strike back? Or is China really a Confucian nation?

  3. Fo-Sho

    People feel powerless to do anything, their opinions and ideas are shaped for them by the powers that be. Fear of provision, the shrinking pensions, the taxes and the mortgage has rendered people powerless…they can barely organize themselves into any real force. They are unlikely to campaign for higher pay and better conditions for Chinese workers when they can get their hands on consumer gadgets which are marketed to be desired possessions which transform a previously mediocre owner of the product into a cool dude.

  4. If anyone know the real truth it will be Obama and the U.S government intelligence. 王立军 (Wong Li Guien) the defector Chongqing police chief who went into the Chongqing U.S Embassy had provided large amount of top Chinese government secrets insider and corruption informations as well as informations about China’s top government internal power struggle. Chinese Joke about that now the 9-members China CCP Politburo becomes 10 members because Obama becomes the 10th member. Obama and U.S intelligence know everything top secret of the Chinese government.

    The group with the U.S support will win. The U.S like to have 习近平 Xi Gin Ping to become the next Chinese #1 leader.

    p.s. The majority of Chinese people don’t want instability because they have had more than enough in their life time since early last century. So any force(s) trying to destabilizing China will never succeed regardless it’s noble motive in the names of freedom or democracy.
    Most Chinese believe no one will have any democracy nor freedom but only civil wars in China should China destabilized. You will see villegers will fight for land, water, and all other resources just like they did in the past. Chinese in a sense are pretty barbaric and CCP always have the firm grip on China where destabilization is concerned. The Chinese are very barbaric and vicious go-get-it type (I know my own people.) Over there no one has the patient to wait because psychologically conditioned that if you won’t get any. Like the long starved animals with limited food supplies… It takes generations, education, and good living to melow them down. After all, how long did it take the Westerners to become civilized citizens? It seems many centuries.

    To all the freedom fighters: time is still not on your side just yet.

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  6. I’m not certain the place you are getting your information, but great topic. I needs to spend some time learning more or figuring out more. Thanks for fantastic info I used to be searching for this information for my mission.

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