The late writer-journalist and China hand Theodore White once said that politics and power struggles in China are opaque, like huge sea monsters battling under water. All the outside observer sees are the churning waves and foam. Occasionally, we get a brief glimpse of the players as the monsters come up for air.
In the last few days, rumors of a coup — or at least of a political struggle for power between rival factions of the Communist Party — are coming out of China, despite the country’s heavily censored Internet.
Josh Chin and Brian Spegele report for the Wall St. Journal, March 20, 2012:
On Monday night, Internet users were startled by reports—entirely unsubstantiated—on China’s wildly popular Twitter-like microblogging sites of gunfire in downtown Beijing. Nerves were further jangled by accounts of a heavier-than-usual police presence along Chang’an Avenue, one of the capital’s main thoroughfares.
Among the legion of social-media fanatics, there has been fevered chatter of a political struggle inside the towering walls of the Zhongnanhai leadership compound in downtown Beijing.
One theory, widely explored: A battle is brewing between Zhou Yongkang—the country’s domestic security chief who is believed to be a strong supporter of Mr. Bo—and President Hu Jintao, Premier Wen Jiabao and other leaders who analysts say likely supported Mr. Bo’s ouster. Mr. Zhou is a member of the party’s all-powerful Politburo Standing Committee, and one of the country’s nine most powerful political leaders.
The same day, March 20, Andy Lees — formerly of UBS and now at AML Macro Ideas — also weighs in on the coup rumors:
[...] there has been some chatter of a coup in China. An article on the web says “Over the night of March 19th and early morning of March 20th, Beijing local time, a message about a large number of military police showing up in Beijing spread widely across microblogs in mainland China. The key figures in the action are said to be Hu Jianto, the head of the CCP, Wen Jiabao, the premier; Zhou Yongkjang who has control of the People’s Republic of China’s police forces; and Bo Xilai who was dismissed from his post as the head of Chongqing City Communist Party on March 15th by Wen Jiabao after a scandal involving Bo’s former police chief”. The article does not really say anything beyond that. Some people have dismissed the troops as security for a North Korean delegation. It could also be to head off any demonstrations against the fuel price hikes.
A second article says that around New Year’s day 2 airforce officers were arrested on suspicion of plotting a coup, and a nuclear submarine on potrol [sic] was ordered back to port because they were thought to have links with the plotters.
There may be absolutely no truth in any of this, but if there is the possible consequences could be enormous for the global economy, for Chinese economic policy response – (remember the cheques that Saudi Arabia wrote to buy calm in the Arab Spring) – and for market volatility generally.
Tighten your seat belts, friends. We’re heading toward even more turbulent times….