China Silence on Xi Speculation Contrasts With Past Denials

China’s silence on Vice President Xi Jinping’s 12-day absence from public view contrasts with past rebuttals of speculation about top officials and is escalating concern over the nation’s leadership succession.

The official Xinhua News Agency took less than a day in July 2011 to deny former President Jiang Zemin had died. Earlier this year, Xinhua published accounts of China’s top security official within days of a Financial Times report that he was under investigation. By comparison, state media haven’t reported on Xi for a week, or mentioned that he canceled meetings with foreign officials on Sept. 5.

The vacuum of news on Xi, weeks before the 59-year-old is forecast to be anointed China’s next president, may be a sign of the severity of his condition, or divisions over how to present his absence. The public remains uninformed even of the date for the congress where the new generation of leaders, including Xi, is set to be announced.

“In a relatively closed system, Chinese society is driven by rumors and conspiracy theories and the government does recognize the need to release some explanation,” said John Lee, an adjunct associate professor at the University of Sydney and author of the book “Will China Fail?” “The fact that you have not had a definitive explanation from state media suggests that there is internal disagreement as to how to release the truth, whatever that may be.”

Health Speculation

Speculation about Xi began after he canceled meetings with U.S. Secretary of State Hillary Clinton and Singaporean Prime Minister Lee Hsien Loong last week. The Wall Street Journal reported that Xi may have injured his back swimming. The Hong Kong-based Apple Daily newspaper, citing unidentified sources, reported today that Xi suffered a heart attack.

Foreign Ministry spokesman Hong Lei said last week that the cancellations were a “normal adjustment” and when asked yesterday, said he had “no information” about Xi.

He Guoqiang, a Politburo Standing Committee member whose public absence since late August had been linked to Xi’s, appeared on state television yesterday visiting Chinese newspapers. Citing an unidentified government source, the U.S.- based website Boxun.com reported earlier that He and Xi may have been hurt in car accidents.

Chinese stocks have risen since Xi canceled his meeting with Clinton, suggesting no sign of investor unease. The Shanghai Composite Index has risen about 4 percent since Sept. 5. The cost of insuring Chinese sovereign bonds against default fell to the lowest in more than a year Sept. 10, according to data provider CMA.

‘Excessively Excited’

“I think people are getting themselves excessively excited by this,” former Australian Prime Minister Kevin Rudd said yesterday in an interview with Bloomberg Television from the Chinese city of Tianjin, where he was attending a World Economic Forum gathering. “I think people frankly need to take a long, strong, hot cup of tea and just calm down a bit.”

“I’ve been following Chinese politics for about 30 years,” said Rudd, a Mandarin-speaker who served as a diplomat in Beijing in the 1980’s.

The run-up to the Communist Party congress has been complicated by the ouster of former Politburo member Bo Xilai, in the country’s deepest political crisis since the 1989 Tiananmen Square protests. Bo’s wife was convicted last month of the murder of British businessman Neil Heywood and he was suspended in April from the Politburo on allegations of violating party discipline.

Xinjiang Tour

The Financial Times reported on May 13 that Zhou Yongkang, a member of the nine-man Politburo standing committee, and who oversees internal security, was under investigation for supporting Bo. State-run China Central Television issued a report four days later on Zhou touring the country’s Xinjiang region, and several of his speeches were published by Xinhua.

Most recently, a day after Sina’s news website reported Sept. 4 that state-owned PetroChina Co. (857) Chairman Jiang Jiemin had been hospitalized, Xinhua published a story confirming he was getting treatment for an illness that wasn’t serious. PetroChina’s parent posted a release on its website saying Jiang chaired a meeting on Sept. 3, hours after the Sina report.

The central bank also used statements about meetings attended by Governor Zhou Xiaochuan to counter a report by risk analysis group Stratfor that he’d fled the country because the government planned to punish him for losses in China’s U.S. Treasuries holdings. The People’s Bank of China posted a photograph of Zhou meeting Japan’s financial services minister, while declining official comment on the Stratfor report.

‘Pure Rumor’

In July 2011, a day after Hong Kong’s Asia Television Ltd. reported that former President Jiang had died, Xinhua issued a one-sentence story saying overseas media claims of his demise were “pure rumor.”

By comparison, Xinhua hasn’t carried an account of any activities by Xi since Sept. 1, after reporting on at least eight events involving him in August, including a meeting with German Chancellor Angela Merkel.

“The longer Xi remains out of sight without clarification as to his condition, the more likely his condition is to be serious and the silence not simply a reflection of party hyper- sensitivity,” said Daniel Lynch, an associate professor at the University of Southern California’s School of International Relations. “Even worse, the top party leaders might not even be fully aware of the problem that their silence creates for governance.”

Speculation about Xi coincides with concern that China’s economic slowdown is deepening. Yesterday, Morgan Stanley became at least the fifth bank to cut its estimate for growth this year after imports slid in August and industrial production cooled.

“The most important thing is that the government stick together and effectively carry out the objectives that have been stipulated in the 12th Five-Year plan,” Morgan Stanley’s China Chief Executive Wei Christianson said at the World Economic Forum event in Tianjin yesterday when asked about Xi’s absence. “Overall we don’t feel the uncertainties. We feel that the path is quite clear.”

To contact Bloomberg News staff for this story: Nicholas Wadhams in Beijing at nwadhams@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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