China�s Xi Vanishes; Where is the Man Rumored to Lead China Next Month? China Having Second Thoughts? What's the Worst That Could Happen?

A regime change in China is slated for next month. Yet Xi Jinping, the man rumored to be the next leader is missing in action.

It is not uncommon for Chinese leaders to disappear from public life for extended periods, but it is uncommon for them to disappear smack in front of a regime change.

It is also uncommon for them to skip planned and announced meetings with foreign leaders. Xi Jinping has cancelled at least four scheduled meetings with visiting dignitaries including a Russian delegation, Singapore�s prime minister and US secretary of state Hillary Clinton last Wednesday and the prime minister of Denmark on Monday.

So where is he?

The Financial Times reports Rumours swirl as China�s Xi vanishes.

Where is Xi Jinping? The man anointed to run the world�s most populous nation and second-largest economy has disappeared from public view just weeks before his expected elevation to lead the Chinese Communist Party.

An official account did not list him among the attendees at an unscheduled meeting held last Friday by the party�s powerful central military commission, of which Mr Xi is vice-chairman.

Late last week the foreign ministry invited overseas media to cover a meeting between Mr Xi and Danish prime minister Helle Thorning-Schmidt scheduled for Monday afternoon. But on Monday the ministry denied that the meeting was ever supposed to take place.

Mr Xi�s mysterious disappearance has sparked speculation about his whereabouts and renewed political infighting just months after the purge of senior Chinese leader Bo Xilai shook the ruling party. It also underscores the opacity and lack of a strong institutionalised mechanism for transferring power in China�s authoritarian one-party political system.

�We know Xi Jinping is supposed to be the next leader [of China] but we have very little idea how he was chosen, which is quite amazing for such a significant position in world politics,� said David Zweig, a professor specialising in Chinese politics at Hong Kong University of Science and Technology. �Perhaps he�s got some health problems, but they don�t want to let the public know about it because they feel it�s important to present the image of a strong healthy leader taking China into the future.�

Speculation Intensifies
The Business Standard reports China President-to-be Xi Jinping goes missing

Speculation intensified on Monday over the whereabouts of China�s presumptive new president, Xi Jinping, who has been missing from public view in recent days as the country prepares for a crucial leadership change.

�There�s every sort of crazy rumor about Xi�s health,� said a senior Chinese journalist, who asked not to be identified because of sensitivity surrounding the case. �But no one is saying anything.�

The speculation adds another wrinkle to the less-than-smooth transition from the departing president, Hu Jintao, to Xi. Earlier this year, a senior Communist leader, Bo Xilai, vanished from view after his wife was charged with murdering a British businessman. Then, earlier this month, another senior official was unexpectedly demoted after a scandal surrounding his son.

And no date has been set for the 18th Party Congress, when the transition is supposed to take place. The consensus is that it will happen next month, but no announcement has been made. The last congress was also held in October, but its dates had been made public in August.

�These are not signs that everything is going well,� said Bo Zhiyue, a political-science professor at the National University of Singapore.

China�s political system has long been a black box, but its secrecy has begun to seem more anachronistic as the country has become one of the world�s biggest economic, political and military powers.

Some of the rumors have it that Xi hurt his back swimming or playing soccer; these were given credence by reports from foreign diplomats who say they were told that his bad back had caused him to cancel the meetings with Clinton and Lee.

Less reliable was a rumor that he was hurt in an auto accident when a military official associated with Bo tried to injure or kill Xi as part of a revenge plot; the report was later retracted.

One well-connected political analyst in Beijing said he was told by party officials that the rumors of skulduggery were wrong. But he said he was told that Xi, 59, had suffered a mild heart attack.

On Monday, the situation grew odder. China�s Ministry of Foreign Affairs denied that the meeting between Xi and the Danish prime minister, Helle Thorning-Schmidt, had been scheduled. Last week, however, the ministry had invited the foreign press for a photo opportunity with the two leaders.

Adding to the conspiracy theories, on Monday a popular microblogging site, Sina Weibo, banned searches for the term �back injury.�

Almost as if to assuage worries about Xi�s health, a newspaper on Monday ran a picture of Xi addressing students at opening of the fall semester of the Central Party School. The photo and speech, however, were from September 1.

China Having Second Thoughts?

It is damn strange to deny a meeting was supposed to take place especially after you invite the foreign press to take pictures. Unfortunately, I cannot shed any more light on the situation. However,  I can postulate more speculative theories.

Is there any chance China is having second thoughts about who the new leader will be? More likely, is there a growing concern about the alleged shift away from infrastructure and export-led growth to a consumer-driven model?

I do not have the answers to either question but I can offer a statement "Let's hope not". China (and the world) desperately needs China to rebalance its economy, no matter what short-term pain rebalancing causes.

And there will be pain. Chinese exporters will suffer, as will the commodity producing countries that export to China. GDP will decline and so will growth in jobs.

However, postponement of rebalancing will only make matters worse.

What's the Worst That Could Happen?

The worst possible outcome would be for China to give up on a rebalancing shift coupled with a Mitt Romney victory who then does as he says he would, label China a currency manipulator, thereby starting a devastating trade war with China.

Regardless of what the reasons are for the disappearing act, here is the key question: Will cooler heads prevail in China and the US? Let's hope so.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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