Dec 042012
 

As has been alluded to in earlier postings, there is an understandable tendency for us in America to have our attention drawn eastward over the Atlantic, towards our founding cultures and beyond to the trouble spots of the Middle East and Africa. But as we are looking east, The East is coming up on us from the west, from across what was once the wide, exotically isolating expanse of the Pacific Ocean.

The Chinese have a salutation, actually a curse of sorts: “May you live in interesting times.” It might be hard to agree on just one term to describe the global socioeconomic times in which we live, but certainly “interesting times” would have to be at the top the list. And nowhere would “interesting times” apply more than in China itself.

2012 is the year of the once-in-ten-years handing over of power at the very top ruling positions in China. Ten years ago it all went smoothly and secretly. This year the process has all the subtlety of a Chinese New Year’s festival. One blind man has opened the eyes of the world to China’s appalling state of human rights violations. Disturbing, but not necessarily a surprisingly new revelation. More telling and much more revealing has been the recent episode of the public fall from grace of the prominent (now former) governor of Chongqing, Bo Xilai.

It is not this brief essay’s intent to cause your eyes to glaze over with all “Those faraway places, with the strange soundin’ names.”[1] But stick with this for a moment. By tracing the threads associated with just this one name, Bo Xilai, the endemic corruption of the entire Chinese ruling and economic system will become apparent and why you and your friends should be aware and concerned.

Bo Xilai is a prince among princelings: those born of the original members of Mao’s inner circle. With such nobility, much was given by way of elite education and financial advantage, and much was expected in the realm of leadership and of the keeping close the reins of power. This year he was due to be lifted up to that holy of holies, the living pantheon of the ruling Permanent Committee of Nine. But Aeschylus could not have written a better Greek tragedy.

You can imagine the American council’s surprise when, in early February, a Mr. Wang, of late a close associate of Mr. Bo, sought asylum. It turns out Mr. Wang was in charge of the police force in Bo Xilai’s megacity of Chongqing and was implicating Bo’s wife, Gu Kailai, in the death of the British Neil Heywood. She, a “princeling” (a derogatory term used by ordinary Chinese citizens) in her own right, along with her sisters and Harvard-student son have economic, political, and military connections (they’re all the same, by the way), but let’s just stick to Bo Xilai for now.

Mr. Bo’s claim to fame was his attack on corruption (thousands were arrested among the 30 million residents of Chongqing) and encouraging (actually demanding) the singing of the good old classics from those happy days of Mao’s farm collectivization, the Great Leap Forward, and the Cultural Revolution, which claimed little more than 30 to 50 million lives. Bo’s “Chongqing Way” drew many accolades and admiring visitors from the top Nine ruling committee, not the least were the head of Internal Security,  along with the presumptive new president, Xi Jinping. Thus in a corrupt system, power and influence is respected, and feared. So when Bo Xilai was able to muscle his way into Chongqing’s famously corrupt environment and replace it with his own system of corrupt cronies, his star was clearly on the ascendency…until that mysterious British citizen’s death (Neil Heywood had ties to Bo and his wife and son).

The house of chop sticks quickly began to crumble with the unsuccessful asylum attempt of the Bo’s second in command, Mr. Wang. This turned on the high beams of interest by the American and British governments and the world’s press. In Beijing, the Politburo and its secretive Committee of Nine, unaccustomed to bright lights in their cloistered lives, quickly slammed the door on Mr. Bo. But it didn’t stop there. Attention was drawn to Bo’s older brother, Bo Xiyong who resigned from the company called China Everbright International in Hong Kong. It took this humble blogger less than 30 seconds to determine that China Everbright International is located at the Hong Kong address of 88 Queensway. It is an address well known to American intelligence agencies and the “U.S.-China Economic and Security Review Commission”[2] as a hotbed for the Chinese Army and intelligence agencies. Operating from front companies, the People’s Liberation Army and the Chinese government and wealthy Chinese citizens (again, pretty much all the same people) are investing in and controlling assets and governments around the world. It is also through these dummy corporations that Chinese Intelligence operatives deal in illegal arms trades and money laundering through the likes of billionaires Lev Leviev (Israel), Pierre Falcone (France), Helder Battaglia (Portugal), and Arcadi Gaydamak (Russia-Israel). They and others have been variously charged with international arms smuggling into the Congo-Brazzaville, Guinea, Zambia, Nigeria, and most particularly, Angola. It is also through the 88 Queensway Group that China has gained considerable control of oil, again particularly in Angola. China has had no qualms dealing with civil rights abusers around the world so long as China can secure oil and mineral rights.

[UPDATE , May 17, 2012;   Here is a perfect example of how fluid and fast moving events are now on the Chinese political power scene. Within 24 hours of this blog posting, a whole bunch more about the Bo Xilai intrigues have come out. (see WSJ link below). It is reported that the Politburo became very concerned (read “threatened”) by Bo’s increasing links to the military, in particular the regiment which had been headed up by Bo’s late father under Mao Zedong. Recall that after the brutal put-down of the 1989 Tiananmen Square protests, The military secured the various Chinese provinces by roadblocks and restricting trade and communications. This gave the PLA (the army) economic and political control which has only been dialed back in the last ten or twelve years. So the Central Permanent Committee, which was already in the midst of dicey negotiations over the transition of power, feels particularly vulnerable and defensive about such palace intrigues. Note also that the military is again increasing its own economic base through real estate and manufacturing.]

At first glance, and maybe even after the second and third, China’s economy and governance may appear to be too complicated, too foreign, too, as we often used to say about the Chinese, too inscrutable. Not so.

Corruption. That’s the key. Once it is understood that China is a one-party monopoly, with all its conniving, back-biting, power-clinging ruthlessness and wealth hoarding, it all become like watching a rerun of “The Godfather”. The trouble is, this is no movie; and there are no outside enforcers of the law to contend with. So why have we as Americans allowed ourselves to be drawn into this den of iniquity? Our nation’s morals and sense of fair play have been severely compromised…perhaps irretrievably. Case in point: the very recent ruling by the federal banking system to allow at least two of the only four major Chinese banks to buy into banks here in America. Are our people in government oblivious to the fact that the banks are majority owned and totally controlled by the Chinese Central Government? Are they not aware that the only reason these Chinese banks look so good on paper is that some years ago four parallel “bad” banks were formed into which the massive amounts of nonperforming previously government-mandated loans were offloaded and that now these four banks have been ordered…mind you “ordered”… to make a whole bunch of new “stimulus” loans into an already inflated building and infrastructure construction environment? Are our folks in Washington unaware of the over 18000 people who have fled China while absconding with millions upon millions of dollars from the banking and industrial sectors of China?

Of late this writer has been researching the topic of modern China’s socioeconomic environment. An unpleasant situation has arisen quite often: In the midst of reading about governmental manipulation of the banking sectors and its choosing of industrial winners and losers, it is many times impossible to distinguish between what has gone on in China and is now going on in America. To see where the United States is heading, one has only to read where China is now. It all looks flashy on the surface, but as the bloggers in Beijing allude to, the “one safe place” in China is the American Embassy. So consider, do you really feel safe about what’s going on in Washington?

Yes, we now all “live in interesting times”. The sooner we take a real interest in that seemingly “far away country” and get used to “those strange soundin’ names”, the sooner we will be able to respond appropriately to the challenges of a corrupt Middle Kingdom in this 2012 Chinese Year of the Dragon.

 

[Here are a couple of very useful and very readable books on the subject of modern rule and economics in China. Modesty insists that the last suggested one is this blogger’s]

“The Party”  Richard McGregor

http://www.amazon.com/The-Party-Secret-Chinas-Communist/dp/0061708771/ref=sr_1_1?s=books&ie=UTF8&qid=1337120470&sr=1-1

“Red Capitalism”  Carl E. Waters and Fraser J.T. Howe

http://www.amazon.com/Red-Capitalism-Financial-Foundation-Extraordinary/dp/0470825863/ref=sr_1_3?s=books&ie=UTF8&qid=1337120803&sr=1-3

“Eastworld”  Dr. Charles Dusenbury

http://www.amazon.com/EASTWORLD-Collapsing-Economic-Miracle-ebook/dp/B005R82HKQ/ref=sr_1_1?s=books&ie=UTF8&qid=1337121124&sr=1-1

Also, “The Economist Magazine” has man articles on China, as does the “Wall Street Journal”. Just type in “China” in the search box and the screen will light up with fascinating and well written articles.

Here is the WSJ link regards Bo Xilai and the army:

http://online.wsj.com/article/SB10001424052702304203604577398034072800836.html?KEYWORDS=bo+xilai

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