WikiLeaks has much food for thought which is not US centric. For instance on China.

A 2007 cable provides interesting insight into the economic and social problems confronting the regime in Beijing. This cable deserves special reading in the light of latest reports about the growing unemployment and increasing rate of inflation.

If still in doubt read what David Barboza said in the New York Times on Dec 13.  

‘The world’s fastest growing economy and a pillar of strength during the global financial crisis could be stalled next year by soaring inflation, mounting government debt and asset bubbles’, he wrote. Moody’s and Fitch Ratings have also recently warned about hidden risks in China’s banking system amidst fears of another wave of non-performing assets tied to the real estate business.

Another report in the very same New York Times by Andrew Jacobs this past week has put the spot light on the struggle of ‘China’s Army of Graduates’ for good jobs. Well, there are no jobs on offer, forget about good jobs.

Now cut to the 2007 cable from US embassy in Beijing to Washington. It was about what a Chinese leader had said on the challenge of running Liaoning province, ‘with its legacy of failed state-owned enterprises and large numbers of laid-off workers’. The remarks were of Li Keqiang, now vice premier, who is destined to raise high in the Communist hierarchy. Four years ago, he was party secretary in the province, and opened up during a dinner meeting with Clark Randt, the US ambassador of the day.

Li spoke of his nervousness about the political impact of the deepening social inequality in Liaoning province, though it is one of the top ten provinces in terms of per capita GDP. It registered a 12.8 percent growth rate in 2006. Yet, the number of its urban residents on welfare is among the highest in the country and average urban disposable income is below the national average.  ‘Though its rural disposable incomes are above the national average, farmers are only half that of urban residents’, the WikiLeaks cable says.

Li frankly admitted, according to the cable, that there was widespread discontent among ordinary people over unaffordable education, health care and housing, “but it is corruption that truly incenses them.”   

As John Chan writes in the World Socialist Web Site (WSWS), the situation in Liaoning is a microcosm of China as a whole. Corrupt officials have plundered state-owned industries through wholesale privatisation and transformed the region into a vast cheap labour platform for Chinese, US and other international corporations.

Another nugget from the 2007 cable is that Chinese leadership is willing to go the full hog to protect the privileges of a chosen few, mostly princelings, if there is a perception that their business interests are threatened. A case in point is the property law. It is designed to protect the private wealth of China’s new bourgeoisie and the huge investments of multinational companies.

“The property law, which will impact the foundation of China’s economic system, demonstrates just how far China has come in 30 years of reform,” the cable said.

The Li-Randt dinner took place in March 2007, and a year later the world witnessed the deep fault-lines of the much fancied capitalist system of America and its European allies.

It was the time, as die-hard socialists are happy to recall that Beijing was reinvesting its export earnings in the US bonds, and was thus helping to prop up the about to burst American housing bubble, and  debt-driven consumption.

It was also the time when the Chinese currency was viewed as overvalued by the Americans.  That the US perception of Chinese yuan remains unchanged is beside the point.

The point of interest, in the context of this article. is a remark Li Keqiang had made about GDP data. The March cable quotes him saying that China’s GDP statistics are unreliable. Well, he is not telling something new. Most independent economists have been wary of the date trotted out by official China. But for a top provincial Chinese leader to make the confession to say so shows how fragile the Communist Capitalist Empire is.

The fragility is on account of a tendency of provincial leaders like Li to ‘speak up statistics’ to present a rosy picture to the bosses in Beijing and thus to be counted.   Leadership in the capital is happy with the ‘sitrup’ since their only concern is how to look good to the outside world, and not the concerns of the working class and toiling masses.  

China’s closest friend, Pakistan is also in the habit of spicing up GDP data.  World Bank once caught the government with its pants down when Nawaz Sharif, the businessman turned politician at the behest of the army, was the prime minister of the country.

Yet, his betenoire, Pervez Musharraf, as two-in –one ruler of the country ( army chief and President) indulged in the same practice to make ‘Pakistan shine’ by the time he was made to hang his boots. Today, his successor regime is at sixes and sevens with the economy, which has been battered by unprecedented floods.  

This aside is only to drive home the point that self-deception is a dangerous game.  China is not Pakistan undoubtedly but it also has its feet of clay moments as the Li discourse to ambassador Randt shows.

A quote from the cable will be in order. “By looking at these three figures (electricity consumption, volume of rail cargo, and bank advances), Li said he can measure with relative accuracy the speed of economic growth. All other figures, especially GDP statistics, are ‘for reference only’, he said smiling.”

John Chan says Li’s candid statement has confirmed the concerns expressed by many analysts after the 2008 financial meltdown. “These commentators pointed to sharp falls in electricity and oil consumption to suggest that the blow to China’s economy was worse than its official figures showed. China’s lowest official growth rate fell only to 6.1 percent in the first quarter of 2009, when more than 20 million migrant workers lost their jobs, mainly from export industries”.

Over the past year or so, social tensions have become more pronounced in China. This is clear from what Prime Minister Wen had said in October. Faced with American and EU pressure to revalue Yuan, he cautioned: “Should China have problems in its economy and society, it would be disastrous for the world.”  

Currency revaluation will end up in massive layoffs and notwithstanding the tight grip of the party on the state apparatus it could trigger a ‘social explosion’.