Why It Is So Difficult To Be Bullish On China....

From The Standard today.

A former PRC official was arrested in Holland after being a fugitive for the past two years. The official is being accused of stealing 250 million Yuan [US$30 million] and had fled China in early 2003 with her family.

Yang allegedly took bribes and other illegal payments in connection with property development scams in Wenzhou. State media earlier reported that about 20 officials were under investigation, and several have already been sentenced to jail terms of three to 20 years.

These numbers are astonishing. I don't know if all $30 million went her way or if it is the total amount pilfered by the gang-of-twenty, but multiply that across all of China and billions of dollars are being robbed by these corrupt officials.

Corruption is a gigantic tax on the economy and China already places near the top, just below France on Forbes tax misery index. The index defined...

The Misery score is the sum of the taxes shown below, at the highest marginal rate in each locale. It is our best proxy for evaluating whether policy attracts or repels capital and talent.

The economic miracle of China risks both bad tax policy and huge waste through corruption. China's leaders do fiddle around with prosecuting some of the most egregious cases such as this one but cannot do much since most of the commies would end up in jail themselves.

One day we will wake up and there will be an awful civil war in China and we will be asking ourselves what the hell happened? The seeds of misery are being sown in China now by their own corrupt and inept leaders. Good luck!