STAFF NEWS & ANALYSIS
China's Big Bet: Authoritarianism Versus Economic Freedom
By Staff News & Analysis - May 31, 2013

Tiananmen group condemns Chinese leader Xi Jinping … Relatives of victims of the 1989 Tiananmen killings have criticised Chinese President Xi Jinping for failing to initiate political reform. The open letter, from the Tiananmen Mothers group, came ahead of the 4 June anniversary of the crackdown. It also came as Mr Xi departed for a tour of Latin America and the Caribbean that will culminate in a summit with US President Barack Obama. – BBC

Dominant Social Theme: Let freedom ring?

Free-Market Analysis: We recently wrote an article on the emergent freedom gambit of the ChiComs and how it was really a gamble of some desperation. You can read our article here:

Elite Retreat: Now Chinese Leaders Plot a Freedom Reformation!

It is a gamble because the Chinese economy is not healthy by any account, from what we can tell.

The dominant social theme was to be one of the Chinese "capitalist" miracle but the reality is more like a Potemkin Village, with the ChiComs controlling most of the real economic levers from behind the scenes.

Now, with the economy badly distorted and exports in tatters, the Chicoms have announced a further relaxation of controls and an increased efflorescence of capitalism. The idea apparently is that "freedom" will stimulate the domestic demand that is supposed to substitute for overseas sales that have diminished considerably.

Impressed by the boldness of this announcement, we commented:

What to do? What to do? Well, unexpectedly – a kind of masterstroke – the ChiCom leaders have decided to do the one thing they CAN do. Liberalize the economy. The last wretched vestiges of communism – within certain limits of course – are to be cleared away. A vital domestic economy is to be substituted for a more authoritarian export-oriented one.

It is a breathtaking gamble because no closed society can long survive true gusts of economic freedom. By taking this action, the ChiComs are taking an incredible risk that economic power-to-the-people will spread eventually to the political sphere.

In our view, this is both noble and desperate. The leadership is trying to do something that has likely never been done in history; they are creating economic freedom without evolving similar political conditions.

Almost on the heels of this commentary comes confirmation that the ChiComs have recognized just this dilemma and are doing everything they can to counteract it (see BBC excerpt at beginning of this article).

Once considerable freedom is introduced into society it is increasingly difficult to control the evolution. It creates entropy. It will take its course. The BBC article shows quite clearly that the ChiComs are prepared for this eventuality and are determined to fight it.

Here's more:

The group accused Mr Xi of "giant steps backwards towards Maoist orthodoxy". Mr Xi was named Communist Party leader in November 2012 and president in March 2013, replacing Hu Jintao. 'Despair' The Tiananmen Mothers are a high-profile group of relatives of those who died when the military moved in to end student pro-democracy protests in Beijing.

They want the government to re-examine the events, release information about those who died and compensate relatives. Since taking power, they wrote, Xi Jinping had not publicly reflected on or held anyone accountable for "sins committed" under past leaders.

Instead, they wrote, he had mixed together "things that were most unpopular and most in need of repudiation" under Mao Zedong and Deng Xiaoping. "This has caused those individuals who originally harboured hopes in him in carrying out political reform to fall into sudden disappointment and despair," they said.

Since taking power Mr Xi has launched a high-profile campaign against official corruption, but his administration also appears to be intensifying online censorship, closing social media accounts of influential opponents.

And so the trap closes … as we observe this two-part approach. Liberalize the financial economy and further reduce the flexibility of the political one. It is all too predictable and it is being done elsewhere as well.

From our point of view, the policies and behaviors of US elites increasingly parallel what is going on in China. And this is probably no accident. We've written several recent analyses showing how economies and currencies are being "evened out" around the world.

Globalists and top central bankers have made it clear that they intend to create an increasingly animated internationalism that may include some sort of worldwide currency. But in addition to evening out currency values and economic vitality, those who try to organize these vast human evolutions intend to create sociopolitical similarities between large economies.

What is being created in China is a kind of corporatism – a neo-fascism – that will include government domination of the levers of financial control and a managed economy beneath of quasi-free business entities of great size and heft. Beneath this structure, the mass of humanity will struggle for a living amidst punitive taxes, Draconian regulation, monetary inflation and general penal dirigisme.

China is evolving in this direction, and the EU, too. And unfortunately, there are similar currents sweeping through the US. It was all foretold in 1984 and it is meant to be seen as irreversible.

After Thoughts

Yet, perhaps, as we point out most every day, it is not. Or not yet, anyway.

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