Former top Chinese official arrested in corruption probe

Former official arrested for corruption

STORY HIGHLIGHTS

• Zhou Yongkang had been one of nine on China's top decision-making body
• State news: He's been arrested and expelled from the Communist Party
• Investigators found Zhou took bribes, helped others, traded power for sex
• He's one of several people ensnared in China's anti-corruption campaign

(CNN) -- China's former top domestic security official, Zhou Yongkang, has been arrested as part of a corruption probe, the country's state-run Xinhua news agency reports.

Zhou -- who had been one of nine members of China's top decision-making body, the Politburo Standing Committee, before stepping down in late 2012 -- was also expelled from the Communist Party, according to Xinhua, citing a decision made Friday at a meeting of the party central committee's political bureau.

The decision comes amid a much touted anti-corruption campaign launched by President Xi Jinping, one that has already ensnared several men who had once been prominent figures in government and the ruling Communist Party.

Corruption is a lightning rod for public discontent across the Asian nation, which for decades has been run by the Communist Party. After taking power in late 2012, Xi banned official extravagance -- from banquets to year-end gifts -- and vowed to target "flies and tigers" alike in his fight against corruption when describing his resolve to spare no one, regardless of position.

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One of them was Gen. Xu Caihou, a former vice chairman of the Central Military Commission, which runs the world's largest standing army. Xu was expelled from the party and handed over to prosecutors after being found to have accepted bribes, Xinhua reported in June. Like Zhou, Xu was in the Politburo before retiring in 2012.

Also this summer, Xinhua reported on the downfall of Su Rong, a former vice chairman of China's top political advisory body. State media reported that Su and his wife profited tremendously through bribes and illegal land deals when he ran the southeastern province of Jiangxi.

Zhou officially got caught up in this campaign in July, when the Communist Party announced it was opening a probe into the retired senior leader for a suspected if then unspecified "serious disciplinary violation."

According to a statement released Saturday by the Supreme People's Procuratorate, or China's prosecutor's office, an investigation determined that Zhou took advantage of his positions to garner profits for others "and accepted huge bribes personally and through his family," Xinhua reported. He did so to help relatives, mistresses and friends, leaking party and country secrets while hurting state-owned assets, according to Xinhua.

The same report noted that investigators found that Zhou had affairs with a number of women, trading "his power for sex and money."

"What Zhou did completely deviated from the (Communist) Party's nature and mission, and seriously violated Party discipline," Xinhua said, citing the statement from the procuratorate. His behavior "badly undermined the reputation of the Party, significantly damaged the cause of the Party and the people and have yielded serious consequences."

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It’s official: America is now No. 2

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A Chinese national flag flutters in front of the headquarters of the People's Bank of China, China's central bank, in central Beijing, May 16, 2014. REUTERS/Petar Kujundzic/Files

Hang on to your hats, America.

And throw away that big, fat styrofoam finger while you’re about it.

There’s no easy way to say this, so I’ll just say it: We’re no longer No. 1. Today, we’re No. 2. Yes, it’s official. The Chinese economy just overtook the United States economy to become the largest in the world. For the first time since Ulysses S. Grant was president, America is not the leading economic power on the planet.

It just happened — and almost nobody noticed.

The International Monetary Fund recently released the latest numbers for the world economy. And when you measure national economic output in “real” terms of goods and services, China will this year produce $17.6 trillion — compared with $17.4 trillion for the U.S.A.

As recently as 2000, we produced nearly three times as much as the Chinese.

To put the numbers slightly differently, China now accounts for 16.5% of the global economy when measured in real purchasing-power terms, compared with 16.3% for the U.S.

This latest economic earthquake follows the development last year when China surpassed the U.S. for the first time in terms of global trade.

I first reported on this looming development over two years ago, but the moment came sooner than I or anyone else had predicted. China’s recent decision to bring gross domestic product calculations in line with international standards has revealed activity that had previously gone uncounted.

These calculations are based on a well-established and widely used economic measure known as purchasing-power parity (or PPP), which measures the actual output as opposed to fluctuations in exchange rates. So a Starbucks venti Frappucino served in Beijing counts the same as a venti Frappucino served in Minneapolis, regardless of what happens to be going on among foreign-exchange traders.

PPP is the real way of comparing economies. It is one reported by the IMF and was, for example, the one used by McKinsey & Co. consultants back in the 1990s when they undertook a study of economic productivity on behalf of the British government.

Yes, when you look at mere international exchange rates, the U.S. economy remains bigger than that of China, allegedly by almost 70%. But such measures, although they are widely followed, are largely meaningless. Does the U.S. economy really shrink if the dollar falls 10% on international CURRENCY MARKETS? Does the recent plunge in the yen mean the Japanese economy is vanishing before our eyes?

Back in 2012, when I first reported on these figures, the IMF tried to challenge the importance of PPP. I was not surprised. It is not in anyone’s interest at the IMF that people in the Western world start focusing too much on the sheer extent of China’s power. But the PPP data come from the IMF, not from me. And it is noteworthy that when the IMF’s official World Economic Outlook compares countries by their share of world output, it does so using PPP.

Yes, all statistics are open to various quibbles. It is perfectly possible China’s latest numbers overstate output — or understate them. That may also be true of U.S. GDP figures. But the IMF data are the best we have.

Make no mistake: This is a geopolitical earthquake with a high reading on the Richter scale. Throughout history, political and military power have always depended on economic power. Britain was the workshop of the world before she ruled the waves. And it was Britain’s relative economic decline that preceded the collapse of her power.

And it was a similar story with previous hegemonic powers such as France and Spain.

This will not change anything tomorrow or next week, but it will change almost everything in the longer term. We have lived in a world dominated by the U.S. since at least 1945 and, in many ways, since the late 19th century. And we have lived for 200 years — since the Battle of Waterloo in 1815 — in a world dominated by two reasonably democratic, constitutional countries in Great Britain and the U.S.A. For all their flaws, the two countries have been in the vanguard worldwide in terms of civil liberties, democratic processes and constitutional rights.

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