So What Else Is New?

Remember political asylum seeker in Australia, Chen Youglin, who claimed that there were 1,000 spies roaming Australia? Well he is back in the news with some further commentary....

A high-profile defector from China's diplomatic corps has warned that Western businesses are wrong to step up investment in the mainland, saying the political environment there is dangerously unstable.

"I would not suggest to French businesses to invest in China. The government is not stable," Chen Yonglin, a former first secretary at China's consulate in Sydney, said in Paris Monday.

"A lot of businessmen from the Western world [believe] that China is growing ... there are actually deeper crises under the surface," he said.

I seem to recall that there were some questions on the reliability of Chen's earlier statements on the number of Chinese spies in Australia. Really now, 1,000 spies? Several hundred may be spying on the millions of cattle that roam Aussie's outback?

However, it seems as if Chen's most recent statements are designed to raise fears of political instability that are lurking in many investors minds anyway. China IS ungovernable as my piece on local officials ignoring the central government directive requesting them to divest all of their mining assetsleads me to believe. The power of the central authority in China flows from the local officials. If they don't comply with orders, it will be very difficult to get much done. And heavy handed central government intervention risks driving the country to fracture along regional lines and potentially causing a tremendous amount of the feared instability.

However, since it seems as if more and more real power is flowing down to the local level, how does the government effectively control this? They can't. However, they can give more autonomy to the people through voting rights and this may have the effect of actually reducing local officials unchecked power. Its food for thought.