Chairman Xi, China’s Looming Crisis, And The Myth Of Infallibility

The gist of analysis on China and its Evergrande debacle is generally “the government will save things” and “China can’t have a crisis.” Both statements rely on the decades-old article of faith that Chinese leaders are all-seeing and all-powerful and have an amazing array of tools in their policy kit. The less this view is true, the more fervently it is asserted.

In the last six months, Xi Jinping and his “Thought” have been elevated in the State media and leadership pronouncements to a level heretofore enjoyed only by Mao. In its public discourse, the Party has significantly elevated Xi to semi-deity status, with the explicit claim he is able to control everything.

As we try to figure out whether the demise of Evergrande will spark a systemic crisis within China and in international markets, it may be helpful to read a new book written by a disaffected property developer named Desmond Shum: Red Roulette. The book should be read together with an excellent paper out of Harvard Business School by Meg Rithmire and Hao Chen on The Emergence of Mafia-like Business Systems in China.

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