When the China Bubble Bursts [FinancialSense]
September 20, 2012 Leave a comment
If the world has invested in the wrong things, and China is one of those things, then the bursting of the China bubble may be the greatest catastrophe of all. China’s financial system is a mess, and a major crisis cannot be far off. With the U.S. economy dipping lower and Europe facing its own financial nightmare, China cannot postpone its own day of reckoning. So what will China’s leaders do? What plans have they made?
To give readers some idea of the problem, a recent WikiLeak revealed that the U.S. had advanced knowledge of a secret Chinese missile test last year. In response to this revelation, Chinese Gen. Xu Guangyu told the South China Morning Post that American officials possessed enough advanced detail to suggest the presence of a sensitively placed U.S. spy in China’s rocket forces. According to the South China Morning Post, Gen. Xu said that “if China could no longer keep secret its missile launches, it would not be able to launch a surprise attack on the U.S.”
But why would China want to launch a surprise attack on the U.S.?
In 2005 Chinese Defense Minister Chi Haotian explained that an ailing Chinese economy would produce a social explosion that could sweep away the Communist Party. “If we do not have good ideas,” warned Chi, “China will inevitably change … and we will all become criminals in history. After some deep pondering, we finally came to this conclusion: only by turning our developed national strength into the force of a fist striking outward – only by leading the people to go out – can we win forever the Chinese people’s support and love for the Communist Party.”
To survive the consequences of an economic downturn, the Party needs to lead the Chinese people – as Chi Haotian suggests – “out of China.” This may seem confusing to those who think China is a post-Communist country; but as journalist Richard Mcgregor points out in his book The Party, China is yet a Leninist state. And yes, they really are Communists, though what this means is lost on nearly all outside observers – and somewhat bewildering to the Chinese themselves. The rulers of China keep their Communist goals and objective from public view. They do not like the glare of publicity; and so they banned Mcgregor’s book because he underscored the Party’s control over the army, police media and big business.