Introduction: An Over-Hyped Crisis
If the overly bizarre has intellectually thrown political risk analysts since time began, the other extreme—ignoring long-term, well-ordered strategies and strategists—is the mirror image mistake. Too often such chess players are seen as something less, with the day-to-day noise of the world obscuring long-held and highly rational patterns of thought and the goals of highly disciplined political actors. The key to first-rate analysis is spotting them early on. And, despite the undoubted fumbling of the recent stock market crisis, Chinese paramount leader Xi Jinping is one such chess player, with a clearly defined and diligently applied strategy for the transformation of his country.
Saying this, there can be no doubt the Communist Party Leadership has made a mess of the present equity crisis. Desperate to avoid looking in the mirror, it has scapegoated stock analysts for reporting the bad news, punishing 197 people for spreading ‘rumours’. As the market has continued to tumble, Beijing has commanded its giant government-controlled State-Owned Enterprises (SOEs) to buy shares to support prices. It has also doled out cash to large brokerages to do the same. Further, The Wall Street Journal reported that, in July 2015, Xi Jinping himself issued an otherworldly executive order that Chinese stock markets must go back up. None of this inspires great faith that the mandarins truly understand how capitalism works. Continue reading