Xi just changed the rules of the game in China — and that makes things scarier for everyone

Chinese President Xi Jinping.
REUTERS/Bogdan Cristel

The rules of engagement have changed in China.

There was a time when loyalty to the party, and loyalty to President Xi Jinping, meant the government left you alone.

But there is now a crisis on, and even those who thought they might be safe from the president’s ongoing crackdown on corruption need to watch their backs.

Someone has to take the fall for a crashing stock market, a slowing economy, and the 145 people killed as a result of an industrial accident in Tianjin earlier this month.

And it’s not going to be President Xi Jinping.

On Thursday the news broke that Liao Hong, president and editor-in-chief of The People’s Daily Online, has been arrested.

The news has set the country abuzz, and not because yet another powerful figure in China has been taken down.

Liao runs a publication that has shown nothing but loyalty to the government. George Chen, managing editor of the Hong Kong publication The South China Morning Post, calls The People’s Daily a “party mouthpiece.”

It seems the mouthpiece isn’t on message.

It’s hard to be on message these days. Websites have been censoring information about the country’s’ five-day stock market crash that began Friday and ended with a rally on Thursday.

REUTERS/Fabrizio Bensch

The rumor among Chinese netizens is that journalists and executives at Xinhua, the official news agency of the Chinese government, should watch their backs next.

There are also reports that Chinese Premier Li Keqiang is taking the blame for China’s stock market turmoil. On June 12, the market started to crash. It was Keqiang, according to reports, who was then charged with stopping the bleeding.

His heavy-handed intervention did little to calm markets, and some say he made things even worse.

“The authorities have been too involved in the stock market and now they’re trying to pass the responsibilities to others,” Hu Xingdou, an economics professor at the Beijing Institute of Technology, told Bloomberg.

“In fact, they have to be responsible for the market crisis. It’s the authorities trying to act like a referee and a player at the same time.”

Some members of the party would like to take Keqiang out of the game entirely, according to the Financial Times.

Xi has already weakened the power of the premiership by creating “small leading groups” on a wide range of issues that were once under the purview of the premier’s office. The power of these leading groups supersedes the power of every other office, essentially rendering the premier toothless.

Chinese Premier Li Keqiang during The Global Impact of China’s Economic Transformation event in the Swiss mountain resort of Davos on January 21.
Ruben Sprich/Reuters

Of course, the more traditional scapegoats are also being thrown into the fire as well.

On Tuesday the government said it was time to “purify” the stock market, meaning some bankers have to go down. One of China’s most powerful banks, Citic Securities, is under investigation along with people connected to the China Securities Regulatory Commission and employees at Caijing, China’s most respected business magazine.

All of them are accused of illegal trading and spreading false information.

As for the recent explosions at a chemical facility in Tianjin, 12 officials were arrested on Thursday on accusations of corruption and dereliction of their duties.

This isn’t even close to the end of these arrests and investigations. Xi has a lot of house cleaning to do, and no one is safe.