Over the weekend, while we celebrated the 236th Independence Day, leading Chinese economist and dissident He Qinglian gave a detailed description of the Chinese Communist Party’s local government debt problem to the Epoch Times. He listed the local loan default potential to be anywhere from $300 to over $450 billion.
Two days later, Moody’s discovered over half a trillion in loans to local cadres that were bascially off the books – and thus, far less likely to be recovered (BBC).
This really shouldn’t come as a surprise. After all, membership in the Chinese Communist Party is basically a license to steal, especially for local government cadres. For much of the 1990s and aughts, this kleptocratic system was funded with sales of land seized from the Chinese people; or loans leveraged with the same. The latter helped fuel a massive real estate bubble. On top of the massive university debt (Epoch Times), the Communist banking sector is in serious trouble.
Does any of this sound familiar?
Can you say TARP in Mandarin?
Of course, the cadres have some advantages that Washington doesn’t, such as a near-complete monopoly of rare-earth metals – at least until the massive find Japanese geologists revealed to the world can be made viable (BBC).
At some point, Zhongnanhai may have to choose between propping up its various allies, cracking down on dissidents (Epoch Times), and keeping its local cadres with sticky fingers afloat. Sadly, the rest of the world seems determined to postpone that day as much as possible. In Washington, the Obama Administration – which has been surprisingly unwilling to crouch into a fetal position in east Asia – has done little to even annoy, let alone frustrate, the Communists’ mullahcratic allies in Tehran (National Review Online). Meanwhile, the European Union has fallen for the “monitoring” nonsense once in again, and pledged a slew of aid for the cadres’ Korean colony (Epoch Times).
This is a familiar picture to anyone who remembers the 1970s, when the Soviets seemed on the march globally, on the offensive diplomatically, and even on solid ground economically. The disasters that were the Soviet economy and ecology were largely hidden from view. The CCP does not have that ability in the early 21st century, so they have resorted to fudging numbers (see above) and various forms of geopolitical subterfuge.
One day, the Chinese people will rise up and take their country back from the CCP. The only question is how long the democratic world will tolerate it and its terrorist allies, and how much damage in blood and treasure we will have to endure in the meantime.
Lest that sound flippant, remember that Germany made its transition from revanchist power in 1890 to stable democracy in 1990 – but that’s a century no one wants repeated.