Man's capacity for justice makes democracy possible, but man's inclination to injustice makes democracy necessary.” - Reinhold Niebuhr

Last week and this week both feature articles (from the Wall Street Journal) about the expected demise of the Chinese Communist Party. The main argument is that a combination of repression and a slowing economy would somehow trigger a regime change, which can range from an elite coup (opponents to President Xi) or popular uprising.

In the strange world of China, the likelihood for internal coup is somehow higher than popular uprising. Indeed, while the population doesn’t believe anymore in much of the elite, the internal security system is very good at managing the information flow and smothering any possible ‘threat to stability’.

On the other hand, the anti-corruption campaign of President Xi and a slowing economy (between which there is an unclear causality relationship) is antagonizing a lot of well placed people all around the country. From the outside, President Xi’s consolidation of power is reaching unprecedented levels. Yet the level of resistance from the inside and well entrenched factions (such as previous President Jiang Zemin) probably requires these dramatic actions.

But it is unclear to us how the Chinese Communist Party’s future is endangered: elites feed on its very existence and have all incentives to keep it alive, at least in name. We cannot exclude a Soviet style breakdown, yet the consequences would be equally disastrous: there is no other force within the country able to hold together a country the size of the United States and 4 times its population.

The Chinese Communist Party was created to address the issues of its time: a divided and lagging Imperial China at the mercy of foreigners and powerful internal warlords. Once again unified, the country has now to build upon the Party’s extraordinary achievements and organize a peaceful transition toward a sustainable form of government. But for this, only a powerful internal force can do it, as it was the case with Soviet Russia. President Xi is probably well aware of that fact. It thus remain to see how he will overcome this incredible challenge.

Science, General Knowledge & Environment

Treadmill Performance Predicts Mortality – “The results reveal that among people of the same age and gender, fitness level as measured by METs and peak heart rate reached during exercise were the greatest indicators of death risk. Fitness level was the single most powerful predictor of death and survival, even after researchers accounted for other important variables such as diabetes and family history of premature death — a finding that underscores the profound importance of heart and lung fitness

Connections in the modern world: Network-based insights – “Historical data suggest that this closeness is indeed a modern phenomenon. For instance, using data from the spread of the bubonic plague, Marvel et al. (2013) estimate that in the Middle Ages average social distances between people were many times higher than they are today. The plague spread relatively slowly from one area to the next, taking four years to travel across Europe at a pace of less than a thousand kilometers per year, as people interacted mostly in limited local patterns.

History & Geopolitics

The world is facing a growing threat of nuclear war – “Twenty-five years after the Soviet collapse, the world is entering a new nuclear age. Nuclear strategy has become a cockpit of rogue regimes and regional foes jostling with the five original nuclear-weapons powers (America, Britain, France, China and Russia), whose own dealings are infected by suspicion and rivalry.

Greece, Russia and the politics of humiliation – (Hat tip Lao Ho) – “When I think about the four international issues that I have written most about over the past year — Russia, the eurozone, the Middle East and east Asia — a theme that links all of them is the rhetoric of national or cultural humiliation.

Capitalism’s secret love affair with bureaucracy – “In this sense, bureaucracy enchants when it can be seen as a species of what I like to call “poetic technology” — when mechanical forms of organisation, usually military in their ultimate inspiration, can be marshalled to the realisation of impossible visions: to create cities out of nothing, scale the heavens, make the desert bloom. For most of human history this kind of power was only available to the rulers of empires or commanders of conquering armies, so we might even speak here of a democratisation of despotism.

The Paradox of America’s Electoral Reform – “China, Russia and Europe are all struggling, but in different ways and toward different ends, frequently because of problems endemic to their cultures. The problem endemic in American culture is the will to reform. It is both the virtue and vice of the U.S. government.

Remember, Kill Chain – “Despite the services of a multibillion-dollar system of intelligence and communication, it took twelve hours for news that the U.S. had killed twenty-three civilians to make its way up the chain. Despite confirmation from the helicopter crews, the Predator team, and the troops that arrived on the scene, successive layers of Special Operations commanders refused to report CIVCAS (civilian casualties). Bizarrely, the technology was less efficient than the Taliban’s.

The Twilight of China’s Communist Party – (Hat tip Lao Ho) – “If the party really is in its endgame, then neither Mr. Xi’s dramatic anticorruption campaign nor his reform program will mean much, at least in the long run. Cynicism in China is at an all-time high. The elite hold foreign passports for their families, and wealth is being transferred offshore through real estate holdings and other means.

Finance & Economics

The big drop: Riyadh’s oil gamble – (Hat tip Lao Ho) – “Some suspected it was rooted in geopolitics: one theory held that the Saudis, acting under US influence, deliberately sought to undermine rivals Russia and Iran. But a close examination of Saudi actions suggests an unexpected series of global political events and — crucially — a misreading of the market were the driving forces behind Riyadh’s gamble.

What the Fed says about China behind closed doors – [About the 2008-2009 massive Chinese stimulus] “I personally find it difficult to believe that much credit could be allocated as quickly as we saw in the first half of the year and for it all to be perfectly efficiently allocated . . . . So my sense is that, yes, at some point down the road we are going to see some financial aftermath of what has happened over the past six months.” FYI, corruption and embezzlement are estimated to account for 30% of the massive $568 billion, while 20% of the loans under the program were deemed to be written off as of 2011.

Picture of the day: Children of War


About Carlito Riego

"Great perfection may appear imperfect, but its usefulness is inexhaustible. Great abundance may appear empty, but its usefulness cannot be exhausted. Great correctness may appear twisted, great skills appear crude, great eloquence appear awkward. Activity conquers cold; inactivity conquers heat. Clear serenity governs the world." - Lao Zi