The alarmingly aggressive anti-Japan rhetoric from the Chinese military is occurring alongside a crackdown on government corruption and it is quite possible that this is not a coincidence. Could China's new government be fanning the flames of armed conflict to distract the populace from an embarrassing concentration of wealth within a ruling party that appears Communist in name only?
National Defence University's Colonel Liu Mingfu, an officially sanctioned spokesperson for Chinese military, is only the latest government official voicing a terrifying level of belligerence towards Japan.
"America is the global tiger and Japan is Asia's wolf and both are now madly biting China," Colonel Liu said. "Of all the animals, Chinese people hate the wolf the most. How do you know [Japan] wouldn't receive another nuclear bomb? The world would hail [China] if Japan receives such a blow."
While negotiations over the disputed islands in the East China Sea continue behind the scenes, the Chinese government's public statements appear designed to increase geopolitical tensions. A spokesman from China's foreign ministry described U.S. Secretary of State Hillary Clinton's efforts to calm the situation as "ignorant of facts and indiscriminate of rights and wrongs."
Meanwhile, the government is quietly implementing an anti-corruption strategy with major economic implications. The Sydney Morning Herald reported Tuesday that "Thousands of Chinese Communist officials have been panicked into a fire sale of their illicit properties and billions of pounds have been smuggled overseas as the country's new leaders intensify a campaign to root out corruption."
To Western ears, a plan that risks a global war to accomplish internal political aims sounds outrageous. But for Canadians, the scale of China's government corruption problem is just as difficult to fathom. In 2012 the Hurun Report, which estimates the fortunes of China's wealthiest families, estimated that the 70 richest members of the ruling Communist government controls $90-billion (U.S.) in assets. When Bloomberg publicized the report, the Chinese government immediately blocked the Bloomberg website, highlighting their discomfort with the allegations.
Unlike developed countries where politicians' net worth are often dwarfed by those of the billionaires they court at fundraisers, Chinese wealth is focused within government. Investors should therefore pay attention to the continuing anti-corruption efforts. The fire sale of luxury apartments could prove to be the tip of the iceberg in terms of asset disposal by prominent bureaucrats who also own major businesses. An intense corruption purge could prohibit the majority of the country's wealthy from new investment, which could slow the economy. At the very least, the current signals from the new leadership are likely to make high-ranking bureaucrats hesitate before making new investments that highlight their extensive wealth.
In a country where social instability has long been the government's greatest fear, allowing a pervasive and increasingly public wealth disparity might from a certain perspective seem more risky than escalating a military conflict. Small wonder if a government "bread and circuses" political strategy is under way.
Scott Barlow