The Ominous Disappearance of Xi Jinping

In this photo taken Sept. 1, 2012 and released by China's Xinhua News Agency, Chinese Vice President Xi Jinping addresses the
In this photo taken Sept. 1, 2012 and released by China's Xinhua News Agency, Chinese Vice President Xi Jinping addresses the opening ceremony of the autumn semester of the Party School of the Communist Party of China in Beijing. Chinese micro-bloggers and overseas websites have come up with all kinds of creative speculation as to why President-in-waiting Xi has gone unseen for more than a week. (AP Photo/Xinhua, Li Tao) NO SALES

The mysterious disappearance of China's heir apparent, Xi Jinping, will be unsettling for Chinese citizens.

Rumors are flying regarding what ails him. According to Willy Wo-Lap Lam, a well-connected professor at Hong Kong's Chinese University, he may have had a stroke. But speculation is running rampant, with guesses about everything from a soccer injury to a palace coup.

Whatever the reality, Xi's fugue is disturbing for two reasons.

First, and most obviously, the clampdown on reliable information is the latest indication that China's power structure is increasingly ossified. The lack of transparency in such an important affair of state is indicative of a perpetually self-protective power structure. When the Chinese speak of "democracy," they are not referring to the Western model -- that is, Jeffersonian, representative, of the people, by the people, for the people. Instead, the crave an efficient, responsive, self-correcting government, one capable of managing -- and adapting to -- the ever-increasing complexity of the Chinese economy and their country's role in global affairs.

The media blackout reinforces the fact that the PRC's political structure remains Leninist, unwilling to modernize and sustain an economic growth paradigm that will require a delicate transfer of wealth between the haves and the have nots. Without urban residency reform, rural landownership reform and a much bolstered safety net, China's urbanization process, one that underpins historic productivity gains, may slow down dramatically. Without transparency, the government will lack the legitimacy to orchestrate pressing change.

Second, and more subtly, the Chinese derive fundamental but unquantifiable confidence from a strong central government. Mainlanders are comfortable with top-down, patriarchic authority. They depend, psychologically and emotionally, on their national leaders to orchestrate stability, the platform on which progress is "constructed." When stability is threatened, the Chinese, an ambitious but insecure people, shift from front foot to back. They retrench into huddled self-preservation or worse. During the Cultural Revolution, ten years of chaotic disorientation, paranoia was the norm and the fabric of society unraveled.

As 2012 heads to a close, mainlanders are already nervous. Due to cyclical and global forces beyond the nation's control, the Chinese economy has already slowed down. Property prices are stagnant. Exports and GDP growth figures are weakening. Headlines questioning the sustainability of "the China model" are appearing more frequently in both international and local publications. Many of our clients -- producers of everything from suitcases to tennis shoes to cars and luxury goods -- have reported significant margin erosion.

A murky leadership vacuum is the last thing China needs right now.

My concern is the ham-handed cover-up of Xi Jinping's whereabouts, assuming China's propaganda machine does not get quickly its act together, may break the masses' tenuous optimism. If that happens, all bets are off.