China isn’t moving towards democratization but “Chaos”
Forecast for the World 2012 -China

Masahiro Miyazaki, a critic and writer, was born 1946 in Kanazawa, Japan. After having worked as an editor, he made his debut in journalism in 1983 with a book titled Another Resource War. He has an established reputation for his critical essays and reportage analyzing the backstage of international politics and the global economy, utilizing his own information sources. As a China watcher, he traveled through 33 Chinese provinces and rode through the high-speed bullet train across China. He is the author of numerous publications including China Running Out of Control.


Present Chinese policy is conducted by a three faction coalition regime. Chinese policy reflects the power balance between the three factions. The first faction is General Secretary Hu Jintao’s Communist Youth League also known as the China Youth League. The second faction is the Crown Prince Party whose members consist of Vice President Xi Jinping and the other descendants of early Chinese revolutionaries. The third is a former General Secretary Jiang Zemin’s Shanghai faction.

Within each faction, there are members of “Old Guard cliques” and “Resource cliques”. Old Guard cliques have interest and patronage mainly in dam and railway projects, and resource cliques have interest and patronage mainly in oil and gas projects and are increasingly gaining power.

We must keep a close eye on how the power balance among them is going to change by autumn 2012 when Xi Jinping is nominated as the next General Secretary at the 18th Communist Party Convention.

For instance, after the high-speed bullet train collision in July 2011, the Minister of Railways, who belonged to Shanghai faction, was blamed for the accident by the Youth League. As a result, he was ousted and the railway budget was cut by 40%.

We should keep an eye out to see whether Xi Jinping will win the power struggle and manage to win a majority of China’s highest-ruling council, the Politburo Standing Committee, which currently consists of 9 members.

At least 20 million vacant houses in China

The collapse of the China’s bubble economy is already in the countdown stage. Since the Communist Party leaders can receive bribes from developers each time a building is built, they have ordered banks to loosen lending to the developers in order to advance housing construction.

As a result, the number of vacant properties in China has now been estimated to be at least 20 million. One expert has estimated the figure to be 65 million. Please note that the United States had 10 million vacant properties during the subprime lending crisis.

There are about 10 thousand property developers in China, and Chinese banks have lent approximately 3 trillion dollars in total to these developers. Even an optimistic analyst has estimated at least 0.85 trillion dollars will turn into bad debt. Presumably, more than 1.2 trillion dollars would turn sour and China’s property bubble, which has grown bigger than the Japanese bubble, would eventually burst.

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China isn’t moving towards democratization but “Chaos”
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