China – Some Recent Issues and Thoughts

1. In the midst of a historic change in leadership (see my 26 November 2011 post “Understanding the Way that the People’s Republic of China is Governed” below), the whole Bo Xilai affair blows up. Here are two articles you may find helpful: “China Purge Sets Up Scramble at Top” and “China’s Falling Star“. This is less political theater than a tremor on the surface that indicates forces locked in struggle below in the lead-up to the 18th Chinese Communist Party’s National Congress this fall. Another way of looking at this (and a good bridge into our next point) can be found in “A Split in China’s Leadership?” – “After nearly two decades of phenomenal growth in power and influence, what role does China’s military, the People’s Liberation Army, see itself playing in Zhongnanhai, the headquarters of the Communist party?”

2. This leads us on to the talk of the Chinese military being less under the thumb of the Communist Party. I have heard concern from some regarding the slight possibility of military coup d’état/putsch as a possibility (personally I don’t find this very likely at this point in time). Here are some interesting items regarding this aspect of current events in China:  “Chinese Leader: Cultural Revolution Coming to China” and “Japan Warns of Chinese Threat” (the latter from the always interesting Walter Russell Mead’s Blog).

3. Finally, a few thoughts on what is currently happening in Chinese capitalism (which, if you think about it, has as its ultimate goal “preserving the rule of the Communist Party” according to Robert Kagan). Wages in China (at least along the industrialized coast) are soaring, which will have tremendous effects on global manufacturing. Yet, all is not as is popularly believed about Chinese capitalism in the USA. Not only does China remain a very poor country on a per capita basis, but much of its balance sheet problems and inefficiency in the use of capital are under-examined by Western business leaders.

We certainly live in, as the Chinese saying goes, very interesting times.

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1 Comment

Filed under China, Economy, Political Risk

One response to “China – Some Recent Issues and Thoughts

  1. Pingback: An Update to “China – Some Recent Issues and Thoughts” | professorruml

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