U.S. markets open in 7 hours 44 minutes
  • S&P Futures

    +7.25 (+0.17%)
  • Dow Futures

    +91.00 (+0.26%)
  • Nasdaq Futures

    +7.25 (+0.05%)
  • Russell 2000 Futures

    +4.40 (+0.19%)
  • Crude Oil

    +0.41 (+0.63%)
  • Gold

    +7.40 (+0.40%)
  • Silver

    +0.47 (+1.70%)

    -0.0009 (-0.07%)
  • 10-Yr Bond

    0.0000 (0.00%)
  • Vix

    -1.70 (-9.24%)

    +0.0059 (+0.42%)

    +0.2380 (+0.22%)

    +492.94 (+0.84%)
  • CMC Crypto 200

    +125.94 (+8.77%)
  • FTSE 100

    +53.54 (+0.76%)
  • Nikkei 225

    +155.32 (+0.53%)

We have reason to believe the unthinkable is happening to China's president

Linette Lopez
xi jinping reflection
xi jinping reflection


The one thing the West has taken for granted in China is that the Chinese Communist Party is unified behind its leadership.

But now, under the pressure of an economic slowdown and a stock market in free fall, we are likely seeing the CCP fracture in a way we've never seen before.

It seems some factions within the party are turning away from President Xi Jinping behind closed doors and at high-level retreats.

This is what we know.

Not known for subtlety

Nothing that's run in China's state-run media is there by accident, and in the last few weeks the government has been sending less-than-veiled messages to power brokers, especially retired officials, within the party.

The message is simple: Back off.

"It should become a norm for officials to relinquish their power after retirement," said an editorial published earlier this month in government mouthpiece The People's Daily.

The government has the means to take down whoever it thinks isn't falling in line. Xi's regime has been engaged in a far-reaching anticorruption campaign for more than a year that many experts believe is his way of getting rid of any opposition and consolidating party power.

The People's Daily article made reference to that investigation and cited Zhou Yongkang — the country's former security czar and the highest-level official to be taken down since the days of Mao Zedong — as an example of someone who didn't know how to relinquish his power.

He'll probably have time to figure it out in jail, where the 76-year-old will likely spend the rest of his days serving a sentence for corruption.

politburo china
politburo china

(REUTERS/Carlos Barria)
A pedestrian walks past electronic signs displaying pictures of China's Politburo Standing Committee members at a subway station in downtown Shanghai on June 18, 2013.

Meet 'Guoping'

Then another editorial followed that openly called out people questioning China's attempt at economic reform known as "The New Normal." That was published across multiple publications, including the People's Daily.

The piece was signed by "Guoping," a pen name the government uses when it wants to get its point across.

"The New Normal" is the government's name for the inevitable slowdown that has come from China's transition from an economy based on investment to one based on consumption. It's a long-term reform play and, to many, one that's long overdue.

But it comes with major pain. Xi had prepped his people for lower growth, but no one expected the slowdown would come so hard and fast.

China margin
China margin


Some within the party, it seems, want Xi to turn back. The editorial last week was his way of saying "absolutely not."

"The in-depth reform touches the basic issue of re-configuring the lifeblood of this enormous economy and is aimed at making it healthier," said the editorial. "The scale of the resistance is beyond what could have been imagined."

The targets of the piece include not just retired officials, but also any official whose power has been weakened in the anticorruption investigation or who is upset about the austerity of "The New Normal."

Beijing-based political commentator Zhang Lifan told the South China Morning Post that the editorial was a sign that things were "not going well" and that a recent meeting of high-level party officials in the Hebei seaside resort of Beidaihe was tumultuous.

"Obviously they did not reach any consensus at the political activities in Beidaihe. Different groups are pursuing their own ways," he said. "This is a test of the leadership's ability to execute its mission."

NOW WATCH: Markets sell off again — US equities down 10% over 5 days

More From Business Insider