Has There Been A Coup In China?

There may be a coup occurring in China. Reports have surfaced on Chinese blogs that there was an unusually heavy security presence around the government’s leadership compound in Beijing Monday night, as well as reports of gunshots in the area. Because of the government’s incredibly tight control of news, the only way to obtain information is to rely on websites such as the Falun Gong-linked Epoch Times, which hinted, “Coup in Beijing says Chinese Internet rumour mill” and the Taiwan-based Want China Times, which headlined, “Shots Fired in Beijing – but what kind?”

The government of President Hu Jintao and Premier Wen Jiabao recently fired Bo Xilai, a leading opposition figure, and rumors are that he and Zhou Yongkang, the chief of China’s internal security, are leading a rebellion. The rumors became stronger on Tuesday when all references to Bo were suppressed by the government.

With the lack of reliable information, the ripple effect of the rumors has been to roil the financial markets. Chris Tedder of Forex.com noted that commodity based currencies were hit hard by the Chinese numbers showing “how sensitive the market is to growth-negative news.” According to Hong Kong/ Shanghai bank, China’s PMI number (Purchasing Managers Index, a gauge of nationwide manufacturing activity) has dropped. This can profoundly affect the world markets which depend on Chinese economic growth.

Because of the Chinese deceleration, prices may have to be recalculated across the markets to be set lower. Crude-oil futures fell as a result of the lowered PMI. With concerns about oil prices thanks to Middle East unrest, an uncertain economy and a coup in China, the economy in the United States may be verging on a second collapse – especially if a new Chinese government begins selling American debt.