3 Ways to Play the Secret Chinese ‘Coup’

China's behind-the-scenes shakeup opens up opportunity

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chinese year of the dragon 630 300x200 3 Ways to Play the Secret Chinese 'Coup'Reports of a coup in the past week have startled many long-time China watchers. Of course, we’ve seen next to nothing in the Western media about it despite the fact that what is going on behind the scenes, now may be the biggest political play we’ve seen in decades.

Call it a “coup” or a “power play” if you like. Either way, recent events in China suggest the Chinese Communist Party is badly fractured at the very top. Former Ambassador Jon Huntsman notes that the split may be the most significant since the tumultuous Tiananmen Square era — a sentiment I share based on more than 20 years of involvement with Chinese markets.

Why talk about Chinese politics here? The power play we’ve just witnessed — albeit from the fringes — is likely to result in a stronger “order” in China, along with increased spending and a big global expansion from China in the months ahead.

Let me explain.

Behind the Scenes in the Chinese Coup

Western media widely reported that Premier Wen Jiabao, China’s No.2, unceremoniously and very publicly sacked rising star Bo Xilai on March 14. But nobody went any further, nor did they bother to understand that what’s happening behind the scenes is the real news.

Not only is the way in which this was handled uncharacteristically public, but the sacking itself is unusual. Bo is the son of a revolutionary hero and wildly popular for his anti-corruption initiatives in Chongqing, one of China’s largest megalopolises.

Bo was known to be angling for a seat on China’s standing nine-person politburo working committee, which would make him one of the most powerful men in China. That’s not a problem in and of itself, as many people ultimately want to be on that committee and spend their entire lives working toward that goal.

However, Bo is the only politician to move his agenda independently of Beijing’s ruling elite in nearly 40 years. That makes him — or made him — dangerous because he single handedly threatened the political status quo. To call his rise to prominence divisive is an understatement.

Premier Wen Jiabao voted against Bo’s promotion to vice premier. President Hu Jintao is rumored to dislike his money-grubbing ways.

Yet, none other than Jiang Zemin, the former leader of the Communist Party and the real No.2 in the CCP’s Standing Committee, has helped further Bo Xilai’s career as has Zhou Yongkang, who is also a Standing Committee member and hardliner.

Fast forward to March 19.

That’s when reports of gunfire, military vehicles and plainclothes police swarming the central government leadership compound of Zhongnanhai in Beijing surfaced.

 3 Ways to Play the Secret Chinese 'Coup'There were also reports of iron fences on Changan Street nearby and a heavy police presence. Both were verified by business contacts of mine who visited the area in an attempt to get to the bottom of the rumors that were spreading around Beijing like wildfire via chat boards, text messaging and the Internet.

Within hours, all three were shut down or squashed by China’s Internet police. The Chinese media claimed the extra security involved the protection of a high-level North Korean official who was meeting with Chinese diplomats.

Bo Xilai’s political mentor, political guardian and standing politburo member, Zhou Yongkang, is apparently missing or under house arrest. He was seen briefly meeting with Indonesia’s minister of foreign affairs, Marty Natalegawa, on March 23 but that’s likely scripted by Hu Jintao and Wen Jiabao.

Zhou is China’s spy chief and head of internal security. He would definitely have the means to engineer an overthrow.

Meanwhile, 85-year-old Jiang Zemin is reported to be in a vegetative state. Presumably, he did not participate in recent events. Or, as is probably the case, he did and this story is planted to allow him to save face.

That would normally be the work of the state’s English language mouthpiece, the Global Times. However, that was not to be.

In fact, the Global Times published an unusually blunt editorial asking Beijing’s central leadership for direction on how to deal with rumors of the attempted coup. It also suggests more than a little confusion over who is running China … a fact I find interesting considering that the coup didn’t “officially” happen.


Article printed from InvestorPlace Media, http://investorplace.com/2012/03/3-ways-to-play-the-secret-chinese-coup-ceo-hnp-chl/.

©2014 InvestorPlace Media, LLC

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