AMPONTAN

Japan from the inside out

China in disorder

Posted by ampontan on Friday, October 19, 2012

THE current state of New World Disorder isn’t exclusively an American or European problem. In China, it may be worse.

There are more than 180,000 public “disturbances” a year in that country, many related the public sector’s seizure of private sector land to sell on the real estate market, but the disarray cuts across many planes. Everyone knows about the increasingly aggressive Chinese territorial claims in the South China Sea and the East China Sea, but few people are aware of the nation’s domestic maritime disputes, which are frequent and fatal. Here’s a report from Caixin Online via the Investing in Chinese Stocks website. It’s called Blood in the Water:

Far from the internationally contested borders of China’s ocean frontier is a tempest over territory between local governments. Experts say blurred partitions have resulted in bloody clashes that are on the rise with the growth of the marine economy.

The battles over boundaries are not only driven by local fishing or tourism communities, but also governments seeking to lay claim on natural resource exploration and extraction administration.

Since 2001, maritime disputes have led to 26 large-scale violent conflicts between local government forces. According to Sun Shuxian, a maritime law expert and co-author of Research on Sea Area Demarcation Policies, clashes on the sea have resulted in hundreds of deaths and injuries.

The central government’s efforts for more than 15 years to implement a smooth dispute resolution mechanism have failed. The usual term for conflicts between regional governments inside the same country that result in death is “civil war”.

Preserving the peace in the modern empire requires behavior not so different from that of centuries ago.

Traffic around Beijing came to almost a standstill on Thursday ahead of the start of eight days of national holiday on Saturday. Many vehicles with license plates of other provinces stuck on the road into the capital were said to be carrying local officials laden with gifts on their way to visit high-ranking officials to further their political careers.

And:

Congestion around the capital is particularly bad this year however due to the Communist Party’s upcoming 18th National Congress, where Xi Jinping will be anointed as the country’s next leader. Many officials from local governments around the country are therefore looking to take the opportunity of the weeklong break to shore up good ties with their new bosses and seek promotion at the congress, said Zhuang Deshui, vice director of the center for government integrity under Peking University.

Further down the food chain, officials at city or county-level governments also visit their superiors at provincial level for the same purpose.

The kowtowing is critical because the disorder starts at the top. Here is Part One and Part Two of a long piece in the Epoch Times describing the recent struggles for national domination.

The first portrays an attempted coup (or preemption) of the incoming Xi Jinping regime, live organ harvesting, labor camps with torture and murder, a May 2006 assassination attempt on Hu Jintao (with two warships firing at the destroyer that Hu was on at the time), and the usual Politburo power struggles that Red Flag countries are prone to.

The second presents a different view of the landing of Chinese activists on the Senkakus two months ago:

On Aug. 15 a group of 14 people took boats from Hong Kong to the Diaoyu Islands—called the Senkaku Islands in Japan. Seven of the group stepped on the island carrying Chinese flags and declared the islands belonged to the People’s Republic of China. They were almost immediately detained by the Japanese.

The landing on the islands applied a spark to the dry tinder of Chinese nationalism and hatred for Japan, and China erupted. Mass anti-Japan demonstrations broke out in major cities throughout China. Among the slogans the demonstrators carried: “The Diaoyu Islands belong to China, Bo Xilai belongs to the people.”

The world’s media reported on these demonstrations as the latest expression of Chinese nationalism and understood them in the context of China’s attempts to assert claims to the South China Sea. Sources knowledgeable about deliberations in the highest levels of the CCP consulted by The Epoch Times for this report tell a different story.

Hu Jintao, the head of the Chinese Communist Party (CCP), saw the landing on the islands as a declaration of war by Zhou Yongkang and the Jiang Zemin faction against Hu Jintao, Premier Wen Jiabao, the presumptive next head of the CCP Xi Jinping, and those loyal to them.

This led to concerns of a split in the party:

Hu Jintao had realized that Bo Xilai’s crimes involved too many Party officials. If all of the guilty were prosecuted, the Party would be pulled apart. Hu agreed to the Jingxi deal to save the Party.

The emergence of serious economic problems was also a factor:

At the same time, the economic news in China was terrible. The Chief of Staff of the State Council had said at a meeting that economic dynamos of Shanghai and Zhejiang Province had not registered 7 percent growth over the past year as had been reported—their economies had actually contracted.

Many companies in the once prosperous city of Dongguan had gone bankrupt. Local governments were having trouble meeting payroll. Economists predicted a “hard landing” for a Chinese economy that suddenly seemed to be in a free fall.

Both camps recognized the bad economic news was a threat to the Party itself and so agreed to work together.

They needed a common enemy:

Jiang’s faction knew they had to keep a tight grip on power. After the Jingxi meeting, the leaders of the faction met frequently, discussed matters, and bided their time.

With the revival of the controversy over the Diaoyu Islands, the faction saw its chance.

That summer, boats meant to take Chinese on the mission of reclaiming the islands had several times been turned back by the Chinese regime.

The Aug. 15 landing was allowed to go ahead by Hong Kong chief executive Leung Chung-ying, who, working with the United Front Work Department, had arranged for Hong Kong fishing vessels to make the sortie.

Leung was a protégé of Zeng Qinghong, who had long been one of Jiang Zemin’s closest allies. Zeng, a former Politburo Standing Committee member and current head of the National People’s Congress, had long held the portfolio for Hong Kong.

The intent:

The Jiang faction wanted to use mass protests to pressure Hu Jintao and Xi Jinping. By bringing China to the brink of war with Japan, the faction could then urge wartime preparations, which would include instituting martial law. The 18th Party Congress and the installation of new leadership would have to be delayed, and Zhou Yongkang and others could remain in power for an extended period of time.

Remember Xi Jinping’s bad back that caused him to disappear for two weeks? It might have been due to all the meetings he was attending:

At the same time that Hu Jintao and Xi Jinping began striking back at the Jiang faction, Xi asked to be let out of becoming the next chair of the CCP.

At a Politburo meeting at the end of August, Xi said he was only willing to be a member of the Central Committee of the Chinese Communist Party and to participate in the building and development of the Party. This shocked everyone in the Party compound of Zhongnanhai and anyone else who knew about it.

On Sept. 4, Xi cancelled a meeting with U.S. Secretary of State Hillary Clinton and dropped out of sight, and the entire world began speculating as to what was happening.

Xi had been originally chosen because he was acceptable to both sides. There was no one to replace him, and if Xi did step down, both factions thought the CCP would immediately collapse.

Party elders emerged and attempted to mediate. Qiao Shi, Li Ruihuai, Zhu Rongji and the very powerful family of Ye Xuanning all reached an agreement and expressed their support for Xi.

During the 14 days of Xi’s disappearance from public view, a new consensus was reached within the Party: the 18th Party Congress would convene on Nov. 8; Bo Xilai’s political life was over; the Party would systematically eliminate the residual influences of the Great Cultural Revolution and gradually discard Mao Zedong Thought, Marxism-Leninism, and so on.

The solution may only have been temporary, however:

After the 18th National Congress, if Xi Jinping still seems to be in the minority and is unable to dispose of his political opponents, local officials may protect themselves by hesitating to express allegiance to him.

The Maoists in the Party have not gone away. In the mass anti-Japan demonstrations in mid-September, the slogan “Bo Xilai Belongs to the People” was once again prominently displayed.

Just as members of Jiang’s faction are forced by the logic of their situation to try to hold onto power for the sake of their own survival, so Xi Jinping may find that his survival depends on holding that faction accountable for its crimes.

To be sure, Falun Gong members operate the Epoch Times, and the newspaper’s portrayal of the group’s role might be exaggerated. Their account of events still seems plausible even if they were to be airbrushed from it, however.

Perhaps this man’s views should also be discounted — they are offered in the context of promoting his own business. Then again, the primary consideration should be whether he has his facts right:

China should be viewed through the lens of rampant corruption, fraud, and insider dealing that has seen a select handful get rich (usually those with close ties to the ruling party) via paper wealth (real estate and stock prices).

After citing several examples, the author concludes:

(I)f you need evidence of just how desperate the Chinese Government has become to maintain control, you should consider that it has launched $1 trillion in stimulus projects…To put this number into perspective, China’s entire economy is only $7.3 trillion. So China just unveiled stimulus measures equal to 23% of its entire GDP. This is more than TWICE the size of the 2008 stimulus plan….

Again, China is beyond a hard landing at this point. Combine this with growing food inflation and it’s possible China may in fact break into several smaller countries in the coming years.

As the South China Post reports, the Guangdong boom town of Dongguan is facing bankruptcy. But the most interesting part of the story is the manner in which China’s incipient democracy is functioning:

While competitive elections are still absent at almost all levels of government, Beijing has started to let villages choose their leader through universal suffrage. These elections have been getting increasingly competitive, and candidates often promise to pay generous “dividends” to villagers to attract votes.

“In some rare cases, the leader-elect promised to give each household 10,000 yuan per month,” Lin said. The money would come from the village community “investment” – effectively, the rent they collected from factories.

Lately, village chiefs have found it difficult to fulfil such election pledges. But instead of reneging on their promises and sparking the anger of villagers, they turn to the rural credit co-operatives – the de facto local banks – for short-term loans at interest rates as high as 30 percentage points.

Banks are willing to lend, because they know that the township government would have to bail villages out if things go wrong.

“Some village leaders are now really worried that the bank may come to call in the loans,” Lin said. “If the villages default, the burden would be transferred to the county or the township government.”

In other words, the fledgling pols are buying votes with public funds the villages don’t have. Off to a flying start, aren’t they?

Concludes one of the persons interviewed:

“Without a radical change in the social structure, the economic transformation will never succeed,” he said.

Is it possible that Chinese reformers can clean up the rot and point the country in the direction of blue skies? That possibility would seem slim. Consider this interview with the man who operates the China Air Daily website that offers a daily visual account of air pollution in the country. Here’s one question from the interview and his answer:

You also include several U.S. cities — what was the reason for that?

The reason I included U.S. cities is because people who have not gone overseas can’t really see what a blue sky is. And when they can click through all the days in New York and Chicago, they can see that skies can be really blue and for a long time. That’s an interesting comparison.

The water isn’t blue, either:

Every day, roughly half of the sewage from over 10 million people in Wuhan swell the city’s pipes and empty directly into the Yangtze River. And the one thing that continues to spring eternal is contaminated wastewater.

Throughout the country, there are wastewater treatment plants operating at below capacity, or sometimes not at all, largely due to huge discrepancies in the building of water treatment plants versus sewage pipe networks.

The Hubei Province city’s nine water treatment centers can barely process the 2.36 million tons of wastewater generated on a daily basis. Meanwhile, several facilities including a wastewater pump built with funds from the Asian Development Bank sit completely idle.

Spending money on aircraft carriers and other luxury goods seems to be more important than clean air and water for those not part of the elite.

But even if the nation is heading down the road to breakup, that would not necessarily prevent it from being a threat to everyone else. Rather, whichever elite has circulated to the top by that point might think overseas adventurism in any of several forms would be the most dependable brake on disintegration.

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2 Responses to “China in disorder”

  1. toadold said

    The various Chinese government owned and operated companies are sucking an increasing amount of money out of the economy still.
    http://www.strategypage.com/qnd/china/articles/20121019.aspx

  2. Harry said

    Privatization or breakup of SOEs is the key to normalize their economy. As expected though, they block any reform as long as they can. State Grid Corporation of China is one such firm. They say criticism of SOEs is a Western conspiracy to defame them.

    Another Power Struggle: The Light and Shadow of Chinese SOEs
    http://www.asahi.com/international/reuters/RTR201210190078.html

    So rural credit co-operatives are on the brink of collapse. In my view, shadow banking is the biggest risk to Chinese economic and political order.
    Chairman Xiao Gang, Bank of China, one of the Big 4 state-owned banks, doesn’t know how big the shadow banking sector is.
    http://www.alsosprachanalyst.com/financials/bank-of-chinas-chairman-has-no-idea-about-the-size-of-shadow-banking.html

    All this messed is explained by Susan L. Shirk, former U.S. Deputy Assistant Secretary of State
    China the Fragile Superpower: How China’s Internal Politics Could Derail Its Peaceful Rise
    http://www.amazon.com/China-Superpower-Internal-Politics-Peaceful/dp/0195306090

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