Corruption In China Risks A Soviet-Style Collapse – Party’s Graft Buster

Yang Xiadou is the Party’s number two man in Xi Jinping’s crackdown on corruption in the Chinese Communist Party – although some have seen this, in part, as a convenient way for Xi to bolster his power base.
During the 19th Party Congress last month, Yang was asked about the anti-corruption drive and how to achieve a balance between human rights and party discipline. Yang replied that, having worked in the Tibet Autonomous Region for many years, human rights was an ‘interesting question’. He recounted a conversation he had with a US assistant secretary of state where he likened Abraham Lincoln freeing slaves in America to China’s actions in Tibet.
‘I said in the hearts of Chinese people, Lincoln is a hero, because he freed the slaves.
On this point the Chinese people and the American people have the same understanding – this is a human rights issue.
In turn, we freed the serfs in Tibet, how come American friends cannot understand this? From Lincoln’s perspective, he should have supported China’s overturning of the serfdom in Tibet.’

This post was published at Zero Hedge on Nov 15, 2017.

To Satisfy Soaring Bitcoin Demand, China’s Exchanges Find A Loophole

It’s been nearly two months since Chinese cryptocurrency exchanges were abruptly shuttered by local regulators, part of President Xi Jinping’s ongoing crackdown on capital outflows and potentially embarrassing or destabilizing market forces in the weeks ahead of last month’s National Party Congress. But now that China’s new president emperor has cemented his grip on power by installing political allies on the Politburo and successfully lobbying to have his name enshrined in China’s Constitution, the exchanges are taking tenative steps to figure out if it’s safe to do business in China again, and what constraints would apply to their operations going forward.
And while providing an online exchange for fiat-to-digital currency transactions is still expressly prohibited, a couple of the country’s biggest exchanges are rolling out an OTC model that resembles the popular peer-to-peer bitcoin trading website Local Bitcoins, and which will “also support fiat currency transactions.”
Here’s CoinDesk:
Some of China’s top bitcoin exchanges are now shifting to the over-the-counter (OTC) market in the wake of a crackdown by regulators in the country. In announcements made on Oct. 31, both OKEx and Huobi Pro said they will introduce peer-to-peer trading platforms that support fiat currency transactions, including the Chinese yuan, as an alternative for the country’s domestic cryptocurrency investors.
Based in Hong Kong, the two exchanges had previously provided solely crypto-to-crypto trading since being founded by their respective parent exchanges, Beijing-headquartered OKCoin and Huobi. They will now pivot toward a combination of the existing structure and the direct, peer-to-peer model.

This post was published at Zero Hedge on Nov 4, 2017.

The 7 Key Takeaways From Xi Jinping’s Vision For “A New Era” In China

As reported first thing this morning, China’s President Xi Jinping outlined his vision for the next five years, ushering in a “new era” (a term he repeated 36 times) of development in China, as the Communist Party’s 19th Congress opened in Beijing on Wednesday. During a 3-hour long speech, Xi said the internal and external situations facing China were undergoing complicated changes which the party needed to address. Xi started with the opening remark that ‘the prospects are bright while the challenges are also grave’, before reminding his audience of his achievements over the past five years, which included: poverty reduction, strengthening the one party rule, national security, cutting down pollution and the Belt and Road infrastructure initiatives. One can also throw in “nationalizing China’s capital markets” in this list.
Further, as DB’s Jim Reid wrote overnight, Xi’s anti-graft drive has achieved an ‘important and irreversible’ momentum and he insisted that China has ‘zero tolerance’ on corruption. On the long term, he wants to set the agenda for the country to be ‘a modern, socialist power’ by 2050. On the economy, he says the liberalisation of both interest rate exchanges will continue as “the door China opened will not close but will open wider and wider”.

This post was published at Zero Hedge on Oct 18, 2017.

Bannon Held Secret Meeting With China’s Second Most Powerful Man

Shortly after Steve Bannon visited Hong Kong last week to give a closed-door speech at a big investor conference hosted by CLSA, a Chinese state-owned brokerage and investment group, Trump’s former strategist flew to Beijing for a “secret meeting with the second most powerful Chinese Communist party official”, less than a month after the former chief White House strategist declared that America was at ‘economic war with China’, the FT has reported.
The meeting occurred at Zhongnanhai, the Chinese leadership compound, where Bannon meet with Wang Qishan, the head of the Chinese Communist party’s anti-corruption campaign.
“The Chinese reached out to Bannon before his Hong Kong speech because they wanted to ask him about economic nationalism and populist movements which was the subject of his speech,” the FT quoted a “person familiar” with the situation.
Mr Wang, who is seen as the second most powerful person in China after President Xi Jinping, arranged through an intermediary for a 90-minute meeting after learning that Mr Bannon was speaking on the topic, according to the second person, who stressed there was no connection to President Donald Trump’s upcoming visit to China.
As the FT adds, the (not so) secret meeting between Bannon and Wang will “stoke speculation that the Chinese anti-graft tsar, who has purged hundreds of senior government officials and military officers for corruption in recent years, may continue to work closely with Mr Xi during his second term in office.” Under recent precedent, Mr Wang, who turned 69 in July, would be expected to step down from the Politburo Standing Committee, the Communist party’s most powerful body. But his many admirers argue that as China’s most knowledgeable and experienced financial technocrat, he should stay on to help Mr Xi force through a series of stalled financial and economic reforms.

This post was published at Zero Hedge on Sep 22, 2017.

Green Growth Grinds Lower In The Red Ponzi

After installing more wind and solar farms than anywhere else on the planet, China is ratcheting back the pace of growth in an industry that’s helped lower the costs of green energy worldwide.
Installations of new wind and solar farms in China is expected to drop 11 percent in 2017 from a record high this year, according to Bloomberg New Energy Finance. That would be the first decline in the history of the modern renewables business, now a little more than a decade old, for a nation that has provided about a third the investment for the industry.
After five years of breakneck growth in the supply, China’s electricity demand is stagnating along with a pause in the nation’s economic expansion. President Xi Jinping’s government has started re-calibrating subsidies for the business, a move that’s likely to hit the industry’s leading manufacturers, Xinjiang Goldwind Science & Technology Co. and Trina Solar Ltd.
‘China shapes the whole world market,’ Paolo Frankl, head of the International Energy Agency’s renewable energy division, said in an interview.

This post was published at David Stockmans Contra Corner on September 23, 2016.

China’s New ‘Reform’ Plan – – Throw Money At The Problem Until The Music Finally Stops

China’s surging credit in August boosted property sales while barely moving the dial on private investment, underscoring the challenge for policy makers striving to support growth while reining in debt risks.
Aggregate financing jumped to 1.47 trillion yuan in August ($220 billion), helping fuel a 39 percent jump in property sales by value in the first eight months. Medium and long-term new loans, mostly mortgages, climbed 528.6 billion yuan. Private investment in fixed assets, meanwhile, stalled at 2.1 percent for a second straight month in the January through August period, matching a record low.
Months after an unidentified ‘authoritative person’ told the Communist Party’s People’s Daily newspaper that China must face up to risks associated with soaring debt levels, policy makers are grappling with how to do that without growth slipping below a target of at least 6.5 percent. At the same time, there’s scant evidence of progress on pledges to rein in excess capacity in industries from steel to cement that are at the center of President Xi Jinping’s efforts to restructure the economy.

This post was published at David Stockmans Contra Corner on September 15, 2016.

The Man Who Fabricates China’s Econ Data Was Arrested For “Selling Power For Sex” And “Lacking Political Faith”

While China’s president Xi Jinping has been conducting a sweeping campaign ever since coming to power over three years ago, meant to root out deply ingrained corruption in China’s communist party, one individual was assumed to be immune from prosecution – the person responsible for fabricating and goalseeking China’s economic “data”, the one in charge of China’s National Bureau Of Statistics. That turned out to be wrong when China’s Central Commission for Discipline Inspection – the local anti-corruption watchdog – announced on Friday it would prosecute the former head of its statistics bureau, Wang Baoan, accusing him of serious violations of discipline, including extravagance, abuse of power and selling power for sex.

This post was published at Zero Hedge on Aug 26, 2016.

Red Capitalism Is Getting Redder – – Xi Takes More Control Of State Companies

Chinese President Xi Jinping is putting more of the ‘state’ in ‘state-owned enterprise.’
Carmaker FAW Car Co., fiber producer Sinoma Science & Technology Co. and miner Tibet Mineral Development Co. have recently modified their bylaws to give Xi’s Communist Party more oversight of management decisions. For example, company boards will now have an obligation to listen to internal party committees before making major decisions.
‘Communist Party officials are stepping up intervention in day-to-day operations of state-owned corporations,’ said Xu Baoli, a senior researcher with the State-owned Assets Supervision and Administration Commission, the government’s main SOE regulator. ‘There were cases in the past where the board would reject a proposal that had gone through the party. I doubt whether that will happen in the future.’
While tightening the Party’s grip on China’s $18 trillion state sector with one hand, Xi and Premier Li Keqiang are carrying out pledges for more market-oriented reforms with the other. Such ‘conflicting objectives’ may be at odds with increasing efficiency, according to Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. The ‘national interest is still being prioritized over business efficiency,’ Shen wrote in a report this week. ‘The board of directors of SOEs may not be able to make personnel or business decisions under the party’s leadership hierarchy.’
Recent steps to merge SOEs suggest an emphasis on strengthening and expanding the companies and may not sustainably boost their profitability, he wrote.

This post was published at David Stockmans Contra Corner by Bloomberg Business ‘ July 8, 2016.

The Red Frankenstein: Why China Keeps Its Zombies Alive

The staying power of AMC’s ‘The Walking Dead’ with Chinese viewers is a wonder to behold. The most watched U. S. show in China even has mainlanders flocking to California for the July 4 opening of Universal Studios Hollywood’s newest attraction: a walk-through park that lets you act the part of post-apocalyptic survivor fleeing the flesh-eating undead.
Soon enough, though, China’s 1.4 billion people may be able to get their zombie fix at home, where the government is staging the economic equivalent of their favorite TV experience. That’s because President Xi Jinping’s pledge to breathe new life into a staggering growth model faces its own untimely death (adding to the world’s grief over the U. K. exiting the European Union).
The first real sign of China’s zombification was Beijing’s failure to attack overcapacity in industries ranging from shipbuilding to steel to mining to cement. In March, theFinancial Times provoked anger in Beijing with its ‘China’s State-Owned Zombie Economy’ headline, along with many others in the foreign media. The second hint came in April, when Xi’s government rolled out plans for a Japan-like debt-to-equity swap program. The International Monetary Fund pounced, warning that securitizing loans might ‘worsen the problem’ by supporting ‘zombie’ companies better off disappearing.

This post was published at David Stockmans Contra Corner on June 27, 2016.

President Xi Jinping Instructs Chinese Entrepreneurs On Getting Ahead – -Love The Motherland, Love The People, Love The Communist Party!

China’s entrepreneurs shouldn’t simply make money. They must ‘love the motherland, love the people, love the Communist Party, and actively practice socialist core values,’ President Xi Jinping told businessmen in March.
The latest to discover this is Ren Zhiqiang, a retired real estate tycoon who must serve aone-year probation for publishing ‘erroneous views’ that ‘seriously violate the Party’s political discipline,’ according to a May 2 statement by a Beijing party committee. A party member, he got in hot water after questioning the president’s call for tighter controls over the media.
Xi’s push for ideological purity – directed at journalists, lawyers, and academics – is now targeting business. It’s a big shift from the presidency of Jiang Zemin, who welcomed entrepreneurs to the party in 2002. Some Chinese have ‘unwittingly become trumpeters of Western capitalistic ideology,’ which could lead to ‘disastrous consequences,’ Xi warned in a speech in December at Beijing’s Party School, reportedQiushi, the party magazine. The speech’s contents were made public on April 30. Such delays are common; the timing signals the government wants Xi’s hard-line message out now.
‘Some businesspeople in the nonstate economy, especially some entrepreneurs, are having errors in their thinking.’ -Party periodicalRed Flag Manuscript

This post was published at David Stockmans Contra Corner on May 6, 2016.

Panama Papers Lay Bare China’s Corruption, Environmental Woes

The fallout from the Panama Papers has landed in China, throwing doubts on President’s anti-corruption campaign and revealing a continued disregard for environmental regulations.
The Panama Papers have shaken political figures around the world, among them being none other than the governmental elite of China. As governments sought to manage the fallout, Beijing was doing what it does best whenever viral topics damage the party’s image. Within less than 48 hours, any reference to the Panama papers was deleted or blocked in mainland China. Even by the standards of the ‘Great Firewall of China,’ the speed at which this occurred was impressive.
Read The Panama Papers: Shadow Networks and How They Operate
As more details have emerged, it is apparent that the order to block discussion of the papers came from the uppermost ranks of the Chinese Party of China (CPC). The documents revealed that close relatives of President Xi Jinping and other members of the Politburo have benefited from the services of Mossack Fonseca, the firm at the heart of the scandal. While Chinese citizens are not banned from setting up offshore accounts, the CPC forbids its members and discourages their relatives from doing so.
Offshore accounts make it easier to provide anonymity in financial dealings by blurring ownership – a key selling point for Chinese elite that long used connections to get rich. In the context of China’s ongoing anti-corruption crackdown, the Panama papers are a huge embarrassment for the leadership.

This post was published at FinancialSense on 04/15/2016.

The Panama Papers

A lot of emails have been coming in with regard to the Panama Papers. Let me say this from the outset; Panama has been the key place to establish offshore accounts for decades. An insider has stolen all documents and handed to the press. This was not a government hack. The press has not made all the documents available and that is curious for they too can be protecting favored people. We now have the biggest document leak in history exposing world leaders and their secretive offshore financial dealings. Some 11.5 million documents have been leaked from a Panama-based law firm with offices in 35 countries; Mossack Fonseca. This leak has exposed a trove of confidential financial dealings by the elites of aides to Russian President Vladimir Putin all the way to relatives of Chinese President Xi Jinping. Naturally, the press likes to focus on Putin. There is much more hidden behind the press curtain.
The stash of records from legal firm Mossack Fonseca was obtained from an anonymous source by German daily Sueddeutsche Zeitung which they then shared with more than 100 media groups by the International Consortium of Investigative Journalists (ICIJ). The documents show links to 72 current or former heads of state including dictators. The ICIJ is hell bent on attacking the rich, not politicians. So the question really is, are the protecting fellow socialists?
While the elite seek to hunt people for taxes, they often live separate financial lives. What has been also exposed is the tremendous conflicts of interest. Iceland’s Prime Minister Sigmundur David Gunnlaugsson had secretly owned millions of dollars of bank bonds during his country’s financial crisis when the country’s financial system collapsed and banks had to be bailed out. Thousands are now demanding Iceland’s Prime Minister resign over ‘Panama Papers’ revelations.

This post was published at Armstrong Economics on Apr 4, 2016.

Chinese Coup Rumblings: Website Prints “Explosive” Letter Calling For President’s Resignation

Xi Jinping considers new job as CCTV news anchor, because it's basically 30 minutes about what he did that day.
— Chris Buckley (@ChuBailiang) February 19, 2016

We’ve written quite a bit over the past two years about the likelihood of social upheaval in China.
Since assuming office, Xi has presided over the country’s emergence as a force to be reckoned with both militarily and financially on the world stage. Indeed, there’s an argument to be made that Beijing has returned the globe to a bipolarity not seen since the height of the Cold War.
Meanwhile, the President has also embarked on an ambitious anti-corruption campaign (‘Tigers and Flies’) that’s ensnared thousands upon thousands of Party officials in a sweeping effort to stamp out perceived violations of decorum and ensure that the rank and file toes the Party line.
But as much as Xi has done to enhance the country’s international standing and create discipline within the Politburo, censorship and oppression are part and parcel of Beijing’s agenda. This was on full display last year during China’s stock market rout when Caijing reporter Wang Xiaolu was arrested for a story he wrote that suggested authorities may be backing away from efforts to intervene to prop up equities. Wang’s piece was blamed for a decline in CS300 futures. Ultimately he recanted, issuing the following (obviously scripted) apology: ‘I shouldn’t have released a report with a major negative impact on the market at such a sensitive time. I shouldn’t do that just to catch attention which has caused the country and its investors such a big loss. I regret’.’.’.’[it and am] willing to confess my crime.’
China’s tightening control over the media comes at a turbulent time. The country is attempting to mark a difficult economic transition that may very well result in the loss of hundreds of thousands of industrial jobs. China is also trying to navigate a currency devaluation that is causing Chinese to move money out of the country by the hundreds of billions. Meanwhile, the underlying, export-led economy is decelerating quickly.

This post was published at Zero Hedge on 03/17/2016.

China Goes Full “Minority Report”, Creates “Pre-Crime” Program

By now, the world is largely familiar with Chinese President Xi Jinping’s fabled ‘Tigers and Flies’ campaign.
Since taking office in 2013, Xi has embarked on an ambitious effort to root out party corruption and ensure that the directives passed down from on high in the Politburo are executed faithfully among the sprawling rank and file. As The Atlantic wrote last year, the discipline ‘problem’ is ‘made more urgent by a slowing economy,’ an economy which desperately needs to be reformed.
‘Reform, however, requires the ability to enact policy,’ The Atlantic flatly adds. ‘That in turn necessitates bureaucrats who follow the central government’s orders.’
Publicly there have been more than 1,500 announced cases against party officials. But that’s just ‘publicly.’ Knowing the Party’s reputation for ‘disappearing’ those who ‘disappoint’ or otherwise act in morally objectionable ways, the real number is impossible to know but is likely orders of magnitude higher.
When China’s stock market began to crash last summer as the country’s margin “miracle” finally buckled under the weight of the millions of illiterate daytrading housewives who poured their life savings into everything from umbrella manufacturers to industrial companies-turned P2P outfits, Beijing extended the corruption probe to those ‘responsible’ for the equity meltdown.
Soon, the quest for stock market ‘manipulators’ and those (like journalists) who would otherwise seek to harm the national interest by, well, by reporting the facts became part and parcel of a kind of mini Tigers and Flies campaign focused specifically on China’s financial markets. That campaign eventually ensnared quite a few officials, prominent money managers, and eminent businessmen, including Guo Guangchang, a self-styled ‘Chinese Warren Buffett.’

This post was published at Zero Hedge on 03/07/2016.

Macau’s Economy Shrinks 20% in 2015 Amid Casino Gaming Slump

Macau’s economic output contracted 20.3 percent in 2015 as the world’s largest center of gambling was hurt by falling casino revenue and fewer visitors amid China’s anti-corruption campaign and slowing economy.
The Chinese city’s economy shrank 14.4 percent in the fourth quarter due to the continued decline in exports of tourism and gaming services, the local statistics bureau said in an e-mailed statement, easing from a fall of 24.2 percent drop in the three months through September.
President Xi Jinping’s crackdown on graft has deterred high rollers from traveling to Macau, the only place in China where casinos are legal, and about $46 billion of market value were wiped out from the city’s six casino operators last year.

This post was published at bloomberg

As China’s Economic Picture Turns Uglier, Beijing Applies Airbrush

BEIJING – This month, Chinese banking officials omitted currency data from closely watched economic reports.
Weeks earlier, Chinese regulators fined a journalist $23,000 for reposting a message that said a big securities firm had told elite clients to sell stock.
Before that, officials pressed two companies to stop releasing early results from a survey of Chinese factories that often moved markets.
Chinese leaders are taking increasingly bold steps to stop rising pessimism about turbulent markets and the slowing of the country’s growth. As financial and economic troubles threaten to undermine confidence in the Communist Party, Beijing is tightening the flow of economic information and even criminalizing commentary that officials believe could hurt stocks or the currency.
The effort to control the economic narrative plays into a wide-reaching strategy by President Xi Jinping to solidify support at a time when doubts are swirling about his ability to manage the tumult. The persistence of that tumult was underscored on Thursday by a 6.4 percent drop in Chinese stocks, which are now down more than a fifth since the beginning of this year alone. The government moved to bolster confidence on Saturday by ousting its top securities regulator, who had been widely accused of contributing to the stock market turmoil. Mr. Xi is also putting pressure on the Chinese media to focus on positive news that reflects well on the party.
But the tightly scripted story makes it ever more difficult to get information needed to gauge the extent of the country’s slowdown, analysts say. ‘Data disappears when it becomes negative,’ said Anne Stevenson-Yang, co-founder of J Capital Research, which analyzes the Chinese economy.

This post was published at David Stockmans Contra Corner on February 26, 2016.

Don’t Call It Capitalism – -Xi Jinping Whips Media Into Strict Adherence To Communist Party Line

Mutual funds are vulnerable to runs that can spill over and cause problems in the broader financial system, according to a blog post published today on Liberty Street Economics by staffers at the Federal Reserve Bank of New York.
The authors, Nicola Cetorelli, Fernando Duarte and Thomas Eisenbach, argue that a run can occur when heavy withdrawals from a mutual fund cause the fund company to sell illiquid assets at fire sale prices. In that situation, the post said, investors will have an incentive to get their money out early, triggering a race for the door that can have a ripple effect beyond the original fund.
‘Redemption runs at the fund level trigger fire sales that depress market prices and spread losses to the broader financial system,’ the authors wrote.
The post does not mention Third Avenue Management, which in December shuttered its $788.5 million Focused Credit Fund after losses and withdrawals left it unable to meet redemptions without selling assets at depressed prices. Third Avenue’s move led to a selloff in high-yield bonds.
Sean Collins, a senior director at the Investment Company Institute, a trade group for the mutual fund industry, said the blog post was a theoretical exercise.

This post was published at David Stockmans Contra Corner on February 22, 2016.

Painting By The Numbers – -The Farce Of Central Planning In China

Fresh evidence of China moving away from a growth-at-all-costs strategy is emerging in the annual targets of the nation’s regional authorities.
With new metrics like debt sustainability and cleaning up the environment rising in focus, 11 of 31 provinces have lowered their growth goals for 2016. Nine have moved away from a pinpoint figure, and now present a range of growth to shoot for – an approach some economists anticipate the national government will adopt when it unveils its objective in March.
The more modest goals are a departure from the days when provincial governments led stimulus binges, creating a debt pile that hangs over today’s growth prospects. While President Xi Jinping and Premier Li Keqiang have signaled they’ll tolerate a slower expansion, they’ve set a line in the sand at an average of 6.5 percent through to 2020 – the pace needed to achieve long-term goals to double incomes and the economy’s size from 2010 levels.
‘The government seems to be lowering the importance of GDP targets and prioritizing things like cleaning up the environment,’ said Zhu Qibing, a Beijing-based analyst at China Minzu Securities Co. ‘The other reason for targeting a range is the increasing difficulty in reaching targets as the economy slows. It’s embarrassing to set a low target, but a high target is too difficult to meet. So a range provides some flexibility.’

This post was published at David Stockmans Contra Corner by Bloomberg Business ‘ January 29, 2016.

This Interactive Graphic Reveals China’s Massive Anti-Corruption Campaign

Since taking office in 2013, Xi Jinping has been on a mission to root out corruption among the ranks of the Communist Party.
Xi, whose efforts have affected both high-ranking officials and those lower on the totem pole, is keen on re-establishing party discipline. Policies handed down from on high often lose their teeth while filtering down through the sprawling party ranks. As The Atlantic put it last year, Xi wants to correct that by ‘reforming [China’s] very political culture.’
The problem is ‘made more urgent by a slowing economy,’ an economy which desperately needs to be reformed. ‘Reform, however, requires the ability to enact policy,’ The Atlantic flatly adds. ‘That in turn necessitates bureaucrats who follow the central government’s orders.’
Xi’s anti-corruption campaign has ensnared scores of officials from the prominent (the ‘tigers’) to the obscure (the ‘flies’), and as Foreign Policy wrote on Thursday, ‘the CCDI [just] released a communiqu promising to maintain ‘unabated forces and unchanging rhythm’ in pursuing the goal of a China where, as Xi put it, officials are ‘unable and unwilling to engage in corruption.”
Some 1,500 officials have seen their cases publicly announced. All 1,500 are represented in the following excellent interactive graphic from ChinaFile called ‘Catching Tigers and Flies.’

This post was published at Zero Hedge on 01/22/2016.

The Three Musketeers Of Global Deflation – -China, Russia And Saudi Arabia

Three huge, vastly important countries on the world stage are in deep economic and political trouble – far worse than we may realize. I’m talking about Russia, China and Saudi Arabia. Think America has problems? They pale in comparison to what Moscow, Beijing and Riyadh face, and our next president may have quite a bit of geopolitical leverage.
China, Russia and the Saudis share some very nasty characteristics. They are secretive, autocratic, brutally repressive police states that ruthlessly crush free speech and political dissent. I’ll start with China. For reasons mentioned in my July column, things have gotten worse in China. Its economy is slumping, crushing the global commodity trade, and sending financial markets into a freefall.
In a raucous, open economy like America’s, ideas, labor and capital move quickly to where they can add the most value; China is proving to be nowhere near as nimble. Promised reforms have sputtered under the weight of corruption and communist bureaucracy. President Xi Jinping’s answer thus far has been to increase repression and intimidate forces that could help move the People’s Republic away from heavy-handed and tone deaf central planning. China’s days of easy growth are over; ten million people enter the labor force every year, and there’s nowhere for them to go. Like Russian President Vladimir Putin, Xi has found it easier to distract his people by stirring up trouble abroad rather than fixing problems at home.

This post was published at David Stockmans Contra Corner on January 22, 2016.