China: Has There Been a Coup of a Coup?

Econintersect:  In China official political news is very tightly controlled and this leads to a situation where rumors can achieve great traction.  That is what appears to have happened in the past month.  There have been a few, often anonymous websites that claimed such things as tanks rolling on Beijing streets, military vehicles on the streets of other cities, shots fired near the compound of the Communist Party’s leadership and leaders being seized by the government because they were about to disclose corruption.

There is a great deal of tension in China as the country approaches the decennial change of top leaders later this year.  The rumors reflect that tension.  What has happened that has fueled the rumors are actions against the leadership in the city of Chongqing where Wang Lijun (pictured), deputy mayor and police chief, was taken away by Chinese state security in late February  after he sought refuge and was turned away from a U.S. Consulate.

Wang and his boss, Chongqing mayor and Communist Party Secretary Bo Xilai (pictured), have been outspoken on behalf of traditional communist ideals, including the Cultural Revolution of Mao Zedung.  They have also received much notice for an active anti-corruption campaign in which more than 1,500 alleged gangsters have been arrested, according to The Sydney Morning Herald.  One of the so-called Chongqing mafia (a former justice bureau chief) was executed after being found guilty of rape and bribery.  According to Wikipedia there had been a much wider corruption dragnet beginning in 2009:

The Chongqing gang trials were a series of triad-busting trials in the city of Chongqing that began in October 2009 and concluded in 2011. Carried out under the auspices of municipal Communist Party chief Bo Xilai and police chief Wang Lijun, a total of 4,781 suspects were arrested, including nineteen suspected crime bosses, hundreds of triad members, and a number of allegedly corrupt police, government and Communist party officials, including six district police chiefs and the city’s former deputy police commissioner, Wen Qiang.^[1] Time described it as “China’s trial of the 21st century”.^[2] The crackdown is believed to be the largest of its kind in the history of the People’s Republic of China. Concerns over due process surfaced following the trial, including allegations of torture, forced confessions, and intimidation.^[3]

It is not clear if missteps in the anti-corruption campaign, or even corruption on behalf of either Wang or Bo themselves is at the root of the removal of the two from government life; or whether they were removed because of their seeming support of Maoist principles.  From Willy Lam in Asia Times (6 March):

The keen advocate for political reform, Premier Wen, has criticized certain cadres’ nostalgia for the Maoist era, stating, for example, last year “A major obstacle to reform is the remnant poison of the Cultural Revolution.”

This week the Chinese government has cracked down on the internet rumor mills.  Last night (31 March) BBC News China reported that six people had been arrested, 16 websites shutdown and two popular blog sites had restricted comments on blog posts.  From BBC News China (31 March):

The State Internet Information Office (SIIO) said the rumours had a “very bad influence on the public”.

Two popular microblogs have temporarily stopped users from posting comments.

The two sites, Sina Weibo and Tencent Weibo, are still letting people post to their own sites. But they said commenting on other people’s posts would be disabled between 31 March and 3 April, so they “could act to stop the spread of rumours”.

A spokesman for the SIIO told state news agency Xinhua earlier that the two websites had been “criticised and punished accordingly”.

He added that that a number of other people had been “admonished or educated”.

So rumors of a coup have been plentiful.  What actually happened may have been the removal of a dissident faction within the Communist Party hierarchy, or a coup of a coup, so to speak.  Or it may relate to the correction of corruption by one or more who had been seen as corruption fighter(s).  The actual facts in the case may never be known.

The uncertainty has led to investment analysis about what stocks might benefit from the political action in China.  See the Investing Blog article today by Keith Fitz-Gerald.

John Lounsbury

Sources:

• China power play:  anti-corruption officials vanish (John Garnaut, The Sydney Morning Herald, 01 April 2012)

• Damaging coup rumors ricochet across China (Damian Grammaticas, BBC News China, 22 March 2012)

• Hu draws blood in Wang Lijun scandal (WillyLam, Asia Times, 6 March 2012)

• China scandal:  Bo Xilai allegations ‘preposterous’ (Michael Bristow and Martin Patience, BBC News China, 29 March 2012)

• China arrests over coup rumors (BBC News China, 31 March 2012)

• Chongqing gang trials (Wikipedia)