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2013 and What it Means for China – Part One

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bo xilai

Last year was anything but a banner year for China. Stories of corrupt cadres fleeing from the Chinese mainland with looted wealth (1) coupled with the story of the homicidal tendencies of rising star Bo Xilai (2) and his wife (3) were splashed across Chinese media.

The power of Bo, who was slated to be one of China’s next leaders, so shook the communist party that its once-in-a-decade leadership handover was delayed over one month and then completed rather unceremoniously.

Beijing feared a revolt should Bo be treated too harshly. If anything, 2012 was definitely a year that China would like to forget.

But what about 2013?

Will China’s new leaders right the country that some netizens are calling “Corruptistan”? Is the new leader, Xi Jinping, ready to embrace market reforms bringing them into the fold of responsible nation states? And what of rights, religious freedom and the Internet? What does 2013 hold for them?

Hold on to your hats and steady yourself for WC’s bold Chinese predictions for 2013. Bookmark this page and then return on January 1, 2014 and see just how the year has treated China versus what is being written here.




Market Reforms?

The West would like to believe that Xi Jinping, China’s new President and leader of the communist party, is more human and less robotic than the somnambulist Hu Jintao.

In order to appear more approachable Xi has gone “Obama” and taken to the cameras with an open collar – sans tie. Xi’s minions, too, are sporting the newest in “communist chic”. Gone are the dour faces perched upon stodgy looking comrades only to be replaced by the new business casual comrades who have been taught to actually smile before the camera and interact with the locals.

Do not let the theatrics fool you. Xi Jinping is as stodgy as the rest. He cut his communist teeth during the most chaotic time of the PRC history and climbed his way to the top while treading on the likes of Bo Xilai and others. (4)

Hiding behind the pasty smile is the cunning of a man who adroitly outmaneuvered some pretty cunning politicians. Xi is anything but docile. In the human meat grinder that is Chinese politics, only the most primal survive.

But what does this mean for reforms? China does not believe in win/win debates. (5) There is only one winner.

Economists would argue that market reforms can save the Chinese economy. They would cut out the fat from the bloated State Owned Enterprises (SOE’s) and divert cash to better performing smaller firms. The problem with this is that Xi has debts to repay and the long climb to the top of the communist heap was not paved with handshakes from small to medium enterprise owners.

Xi is beholden to corrupt cadres and large SOE’s which function as the retiring grounds of ex-military and other cadres. Xi will also hesitate to open markets as it will lessen governmental control on the economy. The communists fear an economic downturn, which is the way they are heading. And like a falling tightrope walker who refuses to give up the balance bar, they will cling to market controls until they teeter.

Xi and crew will talk the talk but continue on the path set before them by the Chinese monolith. Beijing fears anything that smacks of an open market for that would mean allowing the RMB to float, which could increase its value by as much as 30% by some estimates. (6) This would spell disaster to Chinese manufacturing and exports. If this were to occur, the communists will find themselves in a “revolution”.

tiananmen square protests

Likelihood that China’s Economy Will Teeter and Mass Unrest will Increase

Chinese economic data is as opaque as the Beijing air and as highly doubtful. (7) While the rest of the world would be overjoyed with 8% growth, this is not enough to support China. In order to maintain a healthy employment rate, the Chinese must grow their economy 10% per year. Each percentage point less than this equates to millions unemployed and the strain on the economy is showing.

“The unemployment rate in China is one of the most useless and ridiculous statistics out there,” says macroeconomic researcher Arthur Kroeber, with Dragonomics. “No one pays any attention to it, because everyone knows it’s a complete fiction.” (8)

While official Beijing numbers put the level of unemployment at 4.1%, (9) it’s actually much more. As a matter of fact, China’s rural dwellers are suffering unemployment levels that are more profound than the US at just over 8%. (10)

This is a cause for concern with the communists as unemployment can lead to unrest. In China, the unemployed have no safety net, i.e. unemployment benefits. Worse yet, 10% unemployment in a country as large as China means a lot of disillusioned people looking to vent.

“I would suggest that China is not as ‘calm’ as one might imagine,” Hudson said. “The number of protests and riots has increased in an almost exponential form over the last 10 years….Crime rates, especially violent crime rates, are rising… “These are the harbingers of the social unrest…” (11)

This disillusionment breeds discontent, which the Chinese are more willing to express. (12) 2012 was a rough year for the riot police as each day there were hundreds of riots across China. (13) The dissent stems from rancor over everything from corruption and land grabs to unpaid wages.

Things got so bad that in one instance the communists were forced to cave in to a group in Wukan (14) and allow them to actually run for office. Although the candidates were selected they were denuded in the end, ensuring they had no impact on party politics.

Others, such as those in Hong Kong, are calling for the communists to let them be. (15) But this was not the only case of vigilante justice. Crowds also forced the temporary closing of a smelter due to pollution concerns and forced work stoppage as well.

With the Tiananmen massacre two decades behind, some younger Chinese are less than tentative in demanding their rights. They may not take to the streets demanding regime change, but will seek redress for a wrong.

The upsurge in such acts last year has Beijing nervous as they never know where the next disaster will strike. In the past, Chinese were huddled in communal living quarters and much easier to control but nowadays mobilizing a crowd is as easy as whipping out a text or sending an email. And in a country with around one billion smart phones, trouble is always an arm’s length away. Look for several large scale uprisings, which will most likely occur in the southern areas such as Guangzhou, to play a key role.


References & Image Credits:
(1) Before Its News
(2) Wikipedia: Bo Xilai
(3) ABC News
(4) Popup Chinese
(5) Industry Week
(6) Reuters
(7) Business Insider
(8) China Daily
(9) Wall Street Journal:Chinese Unemployment
(10) Alaska Dispatch
(11) YouTube
(12) Wikipedia: Bo Xilai Portrait
(13) YouTube
(14) Wall Street Journal: Wukan
(15) YouTube
(16) Huffington Post

Originally published on TopSecretWriters.com

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