Expect vicious Internet crackdowns to be ongoing. Xi does not officially take office until May, but he and his henchmen have done their best to throttle the net.
Not only have they upgraded the Great Firewall of China, further cutting us off from the West, but they have called for real name registration as well. (1) More disconcerting, however, is that the new regime in Beijing is blocking influential bloggers from writing, even though they have done nothing wrong. (2)
At the heart of the problem is that Xi and company are calling for a war on corruption and the people have complied in spades. Each week there is another story of the public outing a communist official for corruption or sneaking off with prostitutes and stealing land.
In an attempt at slamming the lid on Pandora’s Box, Xi says he is getting tough on corruption but fears the truth. Beijing has historically portrayed itself as the benevolent dictator free of corruption, a thing that merely plagued the lower level cadres.
The Bo Xilai scandal, however, blasted this untruth to the forefront. It was reported that Bo’s family had amassed a fortune although his monthly wage never topped $1200. On top of this, the New York Times reported that the family of Wen Jiabao had done very well after he rose to prominence as the country’s number two, and was worth almost $3 billion. (3)
Foreign News Sources Blocked
Even the family of Xi benefited from his guanxi, as they are worth nearly $400 million. (4)
China is so rife with corruption and cronyism that 160 members of the Communist Party Congress had a family net worth of $221 billion. To put this into perspective, these communists are worth more money than 142 countries make in a year! Looking at it another way, the net worth of 160 members of the party that is sworn to abhor wealth is worth as much money as Egypt created all of last year.
Had these people created their own country last year they would have been the 43 most affluent in the world. It is no wonder that mass rioting is on the uptick when the Chinese leaders are filthy rich and the common Chinese needs to work one year to pay for one square meter of Beijing property.
In order to stave off such bad news, Beijing is blocking foreign news sources hard (5) core. (6) Even more troublesome is the fact that virtual private networks (VPN’s) are being blocked as well. (7)
VPN’s operate as a secure funnel over which confidential information can pass. They are used by people who do not want their net activities monitored and by businesses as well. For the normal Joe, a VPN allows them to access YouTube, Twitter and other sites that Beijing has deemed off limits.
For corporations the situation is worse, they rely on such networks to pass confidential information to the home office. Such information can be financial in nature and or technical and not the sort of thing one wants to share. Beijing’s crazy Internet crackdown has been able to penetrate VPN’s which frequently do not work. As a consequence, corporate secrets may be at risk.
Big Brother’s Arms Grow Longer
Look for the long arm of Big Brother to increase its presence in the months to come. (8) With netizens smelling blood in reporting corrupt cadres, and corruption on the rise, Beijing will have its hands full filtering all the potentially dangerous information.
As an indicator of what Beijing is capable of, they have just announced a seven day waiting period for the blogging of “sensitive news”. What is worse, they are now clamping down on service providers and demanding that they comply with the directive.
This means that all blog hosting sites in China will have to continue to self-censor but also remove sensitive posts for a period of seven days or suffer the consequences. Things are so bad that Beijing is supposedly curtailing foreign media reportage in China.
It is highly likely that an increasing number of businesses will leave China.
China is a key component to most of not all multinationals today. While it’s true many enjoy incredible profit margins here, doing business is getting tougher. The reality is that China needs to create jobs and being the world’s manufacturer will not take China to the next level.
The Chinese are finding it difficult to compete with foreign brands and fail to take responsibility for their impotence. As a knee-jerk reaction and to control the export of profits, the Chinese are making it more difficult for foreigners to operate here.
Small to mid-sized companies are spooked by talks of a revolution and the way the new leaders are headed. Contrary to what large corporations are saying, things do not look promising. Larger companies can weather the storm and thanks to short-term outlook will stay in China and promote their actions by claiming that everything is okay.
Small and mid-sized firms do not have that luxury. They cannot afford the requisite bribes and theft of intellectual property that are part of doing business in China. Aside from that, they are most impacted by spurious communist party decisions. The flight from China is similar to quail sensing the onset of the hunter. At present just a few have been spooked and fled, but look for this to get worse especially towards Q3 and Q4.
References & Image Credits:
(1) Human Rights Watch
(2) Washington Post
(3) New York Times
(5) Asia News
(7) Calvin Ayre
(9) Victor1558 via photopin cc
(10) danielfoster437 via photopin cc