by James Corbett
January 26, 2019
Chinese President-for-Life Xi Jinping is warning that the glorious Communist Party of China (CPC) “is facing long-term and complex tests in terms of maintaining long-term rule, reform and opening-up, a market-driven economy, and within the external environment.” Or at least that’s how BilderBloomBerg is putting it. Rothschild Reuters, for its part, is characterizing Xi’s latest pronouncement as a warning about black swans and gray rhinos. And all of this just as the Chinese GDP has slowed to its lowest growth rate since the 2009 crisis, and just after the reports that Xi has “opened the door to war with Taiwan.”
So what does all of this mean? Is the Chinese dragon falling victim to Trump’s trade war? Is the CPC about to crumble? Is it a cornered animal about to lash out?
In order to parse what’s happening here, we need to read between the lines. As with everything in East Asian society, the real text of Xi’s speech is in the subtext. As noted by Pradeep Taneja of the University of Melbourne, “The Chinese Communist Party never raises alarm. They never say that things are bad. They always indicate that they are in control.” So the fact that President Xi is using such ominous language in a speech to top party officials instead of the usual blather about the inevitable ascendancy of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era signals that there is serious concern within the CPC about the key economic challenges the country is facing.
One of those challenges is the ballooning off-book provincial debt problem. With a slowing economy (as evidenced by the recent GDP figure) and with the central government setting strict quotas on government bond issues, the provincial governments have increasingly turned to Local Government Financing Vehicles (LGFVs) to finance large-scale infrastructure investments and other regional growth programs. The result: a ticking time bomb of debt that may be as large as $5.8 trillion.
But this problem is nothing new. Chinese officials have been warning about the mushrooming local debt problem since at least 2013.
Another challenge cited in the mainstream reports of Xi’s latest warning is the fear that economic slowdown could lead to a loss of political control for the CPC. This is undoubtedly true, as far as it goes. Brute force can only maintain an authoritarian regime for so long, and if the last two decades hadn’t seen a remarkable rise in propserity in China and the creation of something approaching a “middle class” that Chinese peasants could aspire to, it’s doubtful that the CPC would have been able to maintain such rigid control over the country for as long as it has.
But this concern, too, is nothing new. Just like LGFVs, loss of political control has been a key point of Xi’s warnings to CPC party officials since at least 2013.
In fact, even the “gray rhino” fear is nothing particularly new. As readers may or may not know, “gray rhino” is a term coined by American author Michele Wucker and introduced to the world at Davos a few years ago. Unlike “black swans”—the one-in-a-million events that come out of nowhere to completely change the course of events—”gray rhinos” are those dangers that everyone sees but chooses to ignore until it’s too late. For some reason, the term caught on with China’s policy wonks and has been shaping Beijing’s approach to risk (market and otherwise) ever since.
But that’s precisely the point: The Chinese have been talking about gray rhinos for years now, so the fact that Xi is telling party officials to watch out for them is hardly unexpected.
So is there anything new at all in this latest pronouncement, or is it just a chance for the MSM scaremongers to run their typically sensationalistic (and evidence-free) headlines about the imminent collapse of America’s (2D) enemy?
If there is anything new in this latest pronouncement, it is the most obvious of all gray rhinos: The trade war currently playing out between China and its main trading partner, the US. There’s no surprise at all that China’s economy is slowing down in light of all the tariffs, sanctions and uncertainties that are being raised in the ongoing trade war. The only surprise is that China is admitting it. As we all know, China’s official GDP numbers are faker than a three-yuan bill, so when Beijing concedes that there’s been a severe contraction in economic growth you know that something serious is happening. (For extra laughs, read the Confederation of British Industry’s bizarre attempt to put lipstick on the Chinese economic pig by citing…Peppa Pig and the Premiere League?)
So what does all of this mean in practical terms?
On the surface level it means that Beijing is signaling their intention to open the credit spigots even wider. In the immediate wake of Xi’s speech, both the finance ministry and the (laughably named) People’s Bank of China responded by throwing more funny money into the Chinese economy. The Ministry of Finance, for its part, “will increase spending and plan for large scale tax cuts and reductions in social security fees paid by employers to shore up confidence in the economy,” while the central bank “injected 257.5 billion yuan (US$37.9 billion) into the banking system for the first time using its targeted medium-term lending facility to increase loans to struggling firms.”
But more fundamentally it means that the international bankster oligarchy is keeping the possibility of Chinese economic collapse (and the subsequent overthrow of the CPC) as an option on the table. Remember that for the powers-that-shouldn’t-be, the dominance of any particular nation state is not what matters. They only care about how the ascendancy of one nation (or economic system, or ideology, or military power, etc.) can be used to further their aims of constructing a global system of control. Just because they have been planning for decades to use China as the “engine of the New World Order” (and they certainly have) does not mean that they are wedded to that plan.
Remember when Japan Inc. was set to take over the world in the 1980s? Neither does Tokyo.
So if there is anything we should be noting about these latest GDP numbers and Xi’s recent remarks, it’s the fact that they’re even being reported at all (even in the state-run mouthpiece China Daily). This demonstrates a genuine worry on the Chinese government’s part that they may be dupes in this game after all. Just like the Soviets and Al-CIA-da and every other punching bag that Uncle Sam and the banksters have built up only to deflate later on, it’s entirely possible that the New Cold War with China has been called off in favor of a New Cold War with a different boogeyman (one guess which).
But of all of the gray rhinos that are keeping Xi and his communist pals up at night, here’s the scariest: George Soros is now pretending to care about human rights and personal privacy for the express purpose of attacking President Xi and the CPC.
Watch out, ChiComs. When Soros has you in his sights, can a color revolution be far behind?