The rumors of a coup in the People’s Republic of China serve to illustrate the PRC’s concept of governance.

Its economic success over the last generation and a half, or so (roughly 30 years), seems apparent.  It has accumulated the world’s largest stash of foreign currency reserves (some $3.2 trillion), and it has grown into the world’s second largest economy, albeit with the world’s largest population across which to amortize that economy.  Some even argue that this success demonstrates the superiority of the Chinese method of centrally managing an economy.  After all, those folks say, the Chinese government doesn’t waste time debating; they simply decide, and promptly.  Moreover, specific leadership candidates are selected carefully and only after a proven performance record.

But at what cost has come this success?  That’s what the coup rumors highlight.  The power struggle underway (whether it’s really a coup in progress or not is unimportant to this post) is purely a Party struggle; the people of China are not at all involved other than being stuck with living with the outcome.

The current showdown—of whatever form—threatens the carefully planned change in the party and national leadership, including seven of the nine positions on the Politburo Standing Committee.  The thrust of the argument seems to be whether China should go back to a more “revolutionary”—i.e., more directed from above—form of government or reforms should be instituted that lead toward a more constitutional state.

But even at best, whose constitution?  Notice where this argument is occurring: internally, at the top levels of PRC’s Communist Party and People’s Liberation Army government—not among the people.  In fact, the people may also be discussing this, but since they have no say in their own government, their discussions “are unimportant, and [government] does not hear them.”

The coup rumors illustrate another aspect of governance PRC-style.  The rumors began appearing about two weeks ago via Sina Weibo (“China microwave” or “China microblog”), the Chinese version of Twitter.  The government promptly deleted those messages.  Now, searches for key words like “gunfire” or “Changan Avenue” (where much of the Chinese leadership lives and where gunfire allegedly was heard during the “coup”) are answered with this message:

These terms are not being displayed in accordance with the applicable laws, regulations and political guidelines.

Here is Chinese free speech.

The PRC is a one-party dictatorship: there are no checks or balances, as from an independent judiciary or legislature.  The people are unrepresented by individuals of their own choosing in an elected government.   In sum, the people are not Sovereign in their own country—the government that has placed itself above them is.

And that economic success?  Yawning cracks in it have appeared.  The vast migration over the last several years from the hinterland to the coastal cities, where the jobs are, have led to severe housing shortages in those cities, shortages exacerbated by those cities’ governmental requirements that the people must be registered with the city government in order to get city services like utilities, housing, and so on.  The migrants are denied registration, though: they’re not residents of the city.

Additionally, those who do find jobs, including the original residents, are demanding higher wages, which hurts production, which hurts job availability.  On top of that, the lack of jobs for that massive influx of migrants leaves people without money to buy goods and services other than those basic city-provided services (which the migrants can’t get anyway).  This also hurts production, and job availability.  And on top of this, those migrants generally are their families’ bread-winners and were intending to send money back home to family members who didn’t make the move.  This lack deepens the impoverishment of the hinterlands.

All of these changes are easily handled by a flexible, free market, but a centrally managed one, even managed by carefully selected government leaders, simply cannot keep up with the dynamicisms of the country’s (any country’s) real-world economic evolutions.  It’s an edifice poised for a major retrenchment, drawdown of those reserves, or hard collapse.  Or all three.