Wen Jiabao's £1.68bn family wealth: China furious at US exposé

New York Times website blocked after disclosing web of assets in new embarrassment for Communist party

China has lashed out at a US newspaper report that premier Wen Jiabao's family has amassed vast wealth worth at least $2.7bn (£1.68bn), censoring the New York Times website and questioning the paper's motivations.

The story said Wen, widely seen as the humane face of China's top leadership, was not directly linked to the holdings. But the association with such a fortune was in stark contrast to the man-of-the-people image he has cultivated.

A foreign ministry spokesman said the report "blackens China's name and has ulterior motives". Censors blocked the paper's Chinese language website, at least partially obstructed access to its main site, and banned microblog searches for New York Times in English and Chinese.

"China manages the internet in accordance with laws and rules," spokesman Hong Lei told reporters when asked why the sites were inaccessible.

China is a prime example of socialism via the parasitical, predatory State.

The economist Ludwig von Mises showed in 1920 [1,2] that since a socialist economy destroys price information via government intrusion, the myriad of participants in the economy are unable to make a fully rational calculation about true profit and loss. Any economic activity that operates at a loss cannot be “sustainable”, a concept the left loves to scold us about, yet cannot really grasp.

Taking another approach, the Nobel economist F.A. Hayek showed that a national economy had such an immense myriad of dynamic economic relationships that no single committee or bureaucracy, no matter how smart or how well staffed, could possibly know enough to direct prices or production levels. His Nobel Lecture [3] was entitled The Pretence of Knowledge. Hayek had previously used this idea as the basis for a very thorough article [4] on the subject, “The Use of Knowledge in Society.”

At some point, the fact that their Marxist economy could not sufficiently feed, clothe and house their growing population, caused the Chinese Communist Party to became fearful that economic discontent could allow them to be overthrown. Above all, the commies are paranoid about keeping power at any price (and they killed 50 million people once to retain power).

So, they decided to allow people to have economic freedom as long as it did not threaten the power of the Party. The way things have turned out, the Party from the lowest official to the very top are parasites on the private sector. The local official makes his $500 a month, but gets $2500 a month in bribes. Up the chain, the pickings get better.

The downside for the Party is that the more prosperous people become, the more they expect to have a say in how government spends their money. At some point the Party will have to give in or push back. Because of this dynamic and the corruption that has only gotten worse over the years, I think China is very brittle. If the Party cannot maintain full control, there will be very nasty and bloody tensions come out in public. This could get bloody. It will not be pretty, but then again, the wreckage from socialism is always ugly.

[1] Economic Calculation in the Socialist Commonwealth by Ludwig von Mises
http://mises.org/pdf/econcalc.pdf

[2] Why a Socialist Economy is “Impossible” by Joseph T. Salerno
http://mises.org/econcalc/POST.asp

[3] The Pretense of Knowledge
http://mises.org/daily/3229

[4] “The Use of Knowledge in Society,” American Economic Review, XXXV, No. 4; September, 1945, pp. 519–30.
http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=92

I think rather that China is practicing mercantilism, which wiki defines as:

“Mercantilism is the economic doctrine that government control of foreign trade is of paramount importance for ensuring the military security of the state.”

In this case the security of the State is the security of the position of the Communist Party in control of the State, where the Party is the State and the State is the Party.

We see leadership of the Party saying they must create jobs in order to absorb the peasants who are coming off the farm and out of the hinterlands. This is why they are willing to buy our paper money and conspire with debt-mongers in the US to recycle that money into internal Chinese wages through which they pay for jobs and export goods no matter how little money they make on the exports.

In the process of course, they are also building the infrastructure and industrial capacity to built arms and to be far better positioned than at any time in Chinese history to prevail against any foe. This becomes more and more true the longer the one child policy induces couples to perform sex selection abortion so the only child that government allows them to have is a male.

What is a government inclined to do with massive industrial capacity to build arms, a pile of money and tens of millions of excess young men? If history is any guide, that government will find it easy to gin up a war to wage.

“War is the health of the State” —Randolph Bourne

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