China’s View of the Net Shifts as it Seeks to Protect its Bubble of Prosperity

Safety Vent or Petri Dish?
Until recently, Chinese authorities regarded the Internet as a safety valve where people could vent on sensitive topics — within limits.  But coordinated censorship and repression in advance of China’s Party Congress show that the lesson authorities have taken from the Jasmine revolution is that the Net is a petri dish of ideas that can incubate and spread revolution.

Peter Ford’s China’s Preemptive Strike in this week’s Christian Science Monitor digs into how Beijing is tightening its grip on individual rights in China, including use of the Internet.

…Censors have tightened the noose on the Internet, which 460 million Chinese use, narrowing the range of permissible comment on blogs, chat rooms, and other forums.

Searching for “Ai Weiwei” or “revolution” on Sina Weibo, the most popular Twitter-style site in China, brings up a message reading: “According to the relevant laws, regulations and policies, the search results have not been shown.”

China’s domestic security budget now exceeds $95 billion, which is greater than the $92 billion allocated to the People’s Liberation Army. Some see this as an expression of the growing concern that social stability must be the state’s top priority. In true Monitor fashion, the article includes steps that corporations, the UN, and the US government could take to encourage China to maintain its citizens’ civil liberties.

Great Bubbles End with a Bang?
The article points out the real, though perhaps still remote, fear of revolution in China. That same fear is certainly behind China’s economic management, which has been predicated on “growth at all costs.” Last year, as China’s growth continued through a worldwide recession, portfolio manager Vitaliy N. Katsenelson speculated on the Coming Costs of China’s Super Bubble.

His premise, which I recommend you take a look at, is this: “China’s defiance of the global recession is not a miracle — it’s a super bubble. When it deflates, it will spell big trouble for all of us. ” China’s growth is the most focal story arc in the investment world, but it is one fraught with unique risks which simply can’t be fully gamed out. There are fears, that like Dubai, China is at the peak of a mega bubble.

So, when you see the Chinese leadership acting in desperation, treating citizens lawlessly, and building wasted projects just to keep the economy working, it means something. They are the closest observers of domestic risk.  And if their concern increases, those of us in economies bound to China should recognize that our wellbeing is connected to Beijing’s actions too.

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