The 1997 Handover

Anyone even peripherally connected to Hong Kong in the last quarter of the 20^th century was acutely aware of the use-by date: July 1, 1997. On that day, the British lease on the 86% of the Crown Colony known as the New Territories would conclude, and the sun would set on the British Empire in Asia.

The tabloids called it The Great Chinese Take-Away, or The Hangover. Residents saw it as either glorious, or a tragedy.

The rest of Hong Kong – the Kowloon peninsula, Hong Kong island, and other smaller islands – were ceded to the United Kingdom in perpetuity, or at least until China got its act together enough to want them back. Because just about everything Hong Kong consumed came from China (including water and even some electricity), there was little doubt that Beijing held the upper hand.

There were a few who put hope ahead of common sense and thought that the People’s Republic of China should simply extend the lease for another 99 years. After all, in the early 1980s Hong Kong was the source of more than 70% of the foreign investment going into China, and the conduit to most of its trade. Surely the communist wouldn’t kill the goose that laid so many golden eggs, would they?

Holding this view was a clear sign of unfamiliarity with modern Chinese politics; that so many did is testimony to the poor quality of their education. From my first class on modern China at Cal, it was clear that there were two great themes to 20^th century China:

• Throw out the foreigners; and
• Unify the nation.

The first was mainly achieved in 1949, when extraterritoriality treaties were abrogated. The British, French, Germans, Japanese, and others would no longer control key ports, the maritime customs, municipal governments, the courts, and the police. The final act would be the return of Hong Kong and Macau to Chinese sovereignty.

The second would take a little longer.

At the end of the Chinese Civil War, Chiang Kai-shek and the Nationalist (Kuomintang, or KMT) Government of the Republic of China (ROC) retreated to Taiwan. Until and unless China could gain control of that island, the task of unifying the country would remain incomplete. Xi Jinping is rather focused on that issue.

All that is by way of explaining that there was zero chance that Prime Minister Margaret Thatcher would have the least bit of success in negotiating an extension of the New Territory treaty with Deng Xiaoping.

 Why 1997?

In the run-up to 1842, the foreign tea-loving, opium-selling traders along the south-east coast of China were fed up with being told where they had to live, who they had to trade with, and that they couldn’t bring any women to the “factories” (warehouses) in which they were compelled to live. Who did these natives think they were dealing with?

The result was the 1842 Treaty of Nanking (today Nanjing) that ceded barren, poorly watered Hong Kong Island to Britain. More wars (1856-60, 1894, 1900) led to more unequal treaties (1858, 1860, 1898) and an expansion of the size of the colony. Only the last, the acquisition of the New Territories in 1898, was dressed up as a “lease.” The rest were taken by right of conquest.

Hence, the date: July 1, 1997, the day the 99-year lease drew to a close. There was no end date to any other part of Hong Kong, nor to the Portuguese colony of Macau, 40 miles away.

The 1980s

Now we have a date with which to work.

Government and business began considering issues such as very long-term land leases, and how the soon-to-be Chinese Hong Kong would be run. The currency markets took a dim view, and from 1980 began to sell. That year, the currency lost 11% of its value against the dollar. It fell a further 8% in 1982, and 16.5% in 1983. At that point, the financial authorities stepped in and pegged the exchange rate to HK$7.8:US$1.00, where it remains to this day.

The British colonial government began to plan for the handover as well. It knew that there was no hope of protecting the rights of the people of Hong Kong, and so after more than 140 years of refusing to allow any shred of democracy, in 1984 – the year I arrived – there began to be small steps toward some little bit of representational government.

In the 1980s, China was opening up, liberalizing, and generally becoming the hottest business opportunity on earth. While many were skeptical as to how long this might last, most people just put their heads down and made money. Serious money, for some, a good living for most.

All that was thrown up in the air in the spring of 1989. After a decade of economic liberalization, inflation had been running at 18-19% for a couple of years, and peaked in December 1988. Combined with cuts to student subsidies and a host of smaller issues, these challenges laid the groundwork for the trouble ahead.

Deng Xiaoping’s popular heir-apparent, Hu Yaobang, had been forced out by conservative elders in early 1987, and died on April 15, 1989. The genuine out-pouring of grief was reminiscent of the public’s response to the death of Zhou Enlai, in January 1976. This provided the spark – or the excuse – that ignited massive protests, and eventually the massacre of June 4, 1989.

That event triggered a huge exodus from Hong Kong that lasted many years. Anyone with the means to do so sought a foreign passport, as an insurance policy. Business was so good that many promptly returned with their new documents a year or three later, confident that they would be able to escape, if necessary.

The 1990s

Shortly after the upheaval of June 1989, Deng Xiaoping toured the area near the Hong Kong border. These Special Economic Zones were the driving force of China’s modernization, and heavily dependent on Hong Kong money, management, and logistics. His reassurances sparked a renewed surge in cross-border trade and investment. They did not, however, erase the memory of Tiananmen. People were nervous.

“What do you think will happen?”

“I don’t know. Will you stay?”

“I’m looking at a few opportunities.”

“Good luck.”

“You, too.”

The same conversation, the same uncertainty, the same fears, over and over.

Over the next eight years, from Tiananmen to the Handover, Hong Kong people ever more desperately sought to make as much money as possible, just in case. The booming economy drove up the stock market and real estate prices. Inflation had averaged 5.5% since I arrived in mid-1984, but in the eight years prior to the Handover prices rose by 7.5% a year.

In the political and economic analysis business, every pundit sought to stake out a perspective, an insight that had yet to occur to others. Optimists pointed to Governor Chris Patten’s efforts to stimulate political parties by opening up more legislative and district council seats to direct elections. Pessimists predicted that Martin Lee, Szeto Wah, Emily Lau, and other progressives would quickly be thrown out of office, and into jail. They were both mostly right.

Asia boomed.

Tiananmen was quickly followed by the collapse of European communism. The end of the Cold War divided attention between Europeans seeking to reestablish a coherent world view, and others who saw China as the greatest thing since fried rice. The World Wide Web and Human Genome Project were still pending. The here-and-now was the European Union, NAFTA, the Great Moderation, and dictators on the run.

Oh, the difference a day makes

On July 1, 1997, Hong Kong had a new landlord. On July 2, 1997, East Asia had a new future, and it had nothing to do with the Handover.

After a costly battle with currency speculators, the Bank of Thailand threw in the towel and let the Thai Baht devalue, sharply, on July 2^nd. While Hong Kong was nursing the Mother of All Hangovers, the Baht dropped 16.7% in one day.

Two weeks later, Malaysia and Singapore relaxed their rigid exchange rate regimes, and it was off to the races. By the time the dust settled, currencies across the region had lost 20-80% of their value, except Hong Kong and to a lesser extend Taiwan and Japan.

Welcome to the new world, where the Asian Miracle had just ended.

(c) David O’Rear 2026

֍ ۝ •⁖ ↈ, to you, too!

One in five stars similar to our sun have planets in the inhabitable goldilocks zone we occupy. There are two hundred billion stars in our Milky Way alone, which means forty billion candidates for life somewhere … out there. The closest is 4.2 light years away (25 trillion miles), over thataway by Proxima Centauri.

Which makes it all the more puzzling where that thing came from.

Fifty years ago, we sent two Voyager space capsules off on a one-way trip to … somewhere. While wandering around our solar system, they sent back fascinating insights into how we came to be. We included a plaque, and audio recording. We just assumed the aliens could figure out grooves on a disk, and that they had ears.

Travelling at about 10 million miles an hour, Voyager One is expected to finally reach a point one full light year from earth in November 2026. It takes about a day for messages to reach us from that distance, which makes conversation tricky.

More depressingly, it isn’t going anywhere that is likely to have interesting planets, at least not right away. About the time of the 500^th anniversary of American independence, the Ort Cloud – a loose collection of Things Not Planets – will slide by.

But there isn’t likely to be anyone there to listen to the Golden Record of sounds from earth, even if they can figure out how to play an LP.

Greetings!

So, how did their calling card, the one we just received, get here?

If our yet-to-be-identified pen pals (at least we hope they’ll be our pals!) haven’t cracked the secret of faster-than-light (FTL) travel, then that … thing that showed up in our neighborhood recently must have been launched several thousands of years ago, if not millions.

About the time we were figuring out agriculture, they were launching rockets. When we were squeezing mud into pots, they were shaping titanium into missiles.

So just exactly how anxious are we to meet these folks?

Of course, they may well have cracked the uncrackable, and figured out how to travel faster than the speed of light. If so, then their understanding of how the universe works is not only very different from our own, but also very far advanced.

Alternatively, the aliens might not be anything like us, but that seems unlikely. They sent a message, so we know that at a minimum they can communicate over distance by way of symbols inscribed on physical objects. And, they expect us to have eyes to see the message we received.

We don’t know if there is another message, one that we haven’t noticed or can’t understand. Possibly there’s a fragrance that we can’t detect, or that didn’t survive the journey. Maybe there’s an audio message like ours, but their storage medium is as weird as grooves on a disk.

Could it be that we’re completely misreading the entire intent of this object? What if it isn’t a universal postcard, but something else.

Say, a worm on a hook, for example?

By David O’Rear © 2026

Across the Border

My first trip to China was in the Summer of 1981, at the end of a year of studying Chinese in Taiwan. Sister Allison and her fiancé announced they would marry in March, and so I used the second half of my roundtrip air ticket to attend their wedding. This was earlier than I intended to return, but didn’t want to be the only one in my extended family to miss the celebration.

My parents, recognizing the choice I made, very generously offered me another ticket to Asia, so that I could continue my studies. Considering their apprehension at my initial decision to abandon civilization (or so it seemed) for a year abroad, this was quite an endorsement. Dad worked with a travel agent friend to maximize my flexibility and stopovers (and minimize the price, the princely sum of about $800, roundtrip). And, so, at the end of my studies in Taiwan, I flew to Hong Kong to join a tour group heading into China.

To put the time frame into perspective, the United States had 20 months earlier broken relations with Taiwan, and established diplomatic ties with China. I had spent the previous year explaining to Taiwanese friends that we Americans didn’t really hate “Free China,” but that we had to recognize reality. It was a tough sell.

While I was sorting out my visa in Hong Kong, I happened to see dozens of people standing outside a television retail shop watching the wedding of Charles and Diana (July 29, 1981). The first space shuttle had flown three months earlier, but we still didn’t know what AIDS, MTV, or MS-DOS would come to mean.

Travel 1.0

At the time, American tourists were required to be part of a state-run tour group, so I dutifully joined a 10-day long trip to Guangzhou, Shanghai and Beijing. Immediately after our train crossed the border from Hong Kong to Shenzhen, I began shooting high-speed film with my new Pentax ME Super 35mm camera. I set the fastest shutter speed available, and probably used ASA400 Kodachrome color film, to capture clear pictures of objects in motion. The results were still blurry, but recognizable: farmers plowing rice paddies behind water buffalo. Today, the city is only minutes from Hong Kong by fast train, and home to 10 million people.

Everything was exciting! I had spent the previous two years struggling with Chinese, in my final year of college and then in Taiwan. Here in China proper, my studies would be tested. Sign boards whizzed past too fast to read, but presenting a glimpse of a world that would consume me for the next four decades.

Our first night was spent at the White Swan Hotel, on historic Shamian [sandy faced] Island in the heart of the city. Because Qing Dynasty mandarins were determined to limit the influence of outsiders, this was where pre-20^th century foreign barbarians were confined. They were forbidden to bring families with them, and were forced to limit their business and social activities to a small area. Some of the buildings on the leafy main street were 100-year-old European designs. One bore the name “City Bank of New York” chiseled in the stone face: the first local office of what would become Citibank.

Guangzhou didn’t leave much of an impression on me, at least in comparison to Shanghai and Beijing. We visited the Sun Yat-sen Memorial, an obligatory stop to pay respects to the only Chinese leader revered by both communists and nationalists. We ate Cantonese food, which was never a favorite, but particularly so when the basic ingredients didn’t seem very fresh. And, we drove around in a 16-seater mini bus, and admired the city from a distance. The Qing mandarins would have easily recognized China Travel Service’s attitude toward foreign infections.

Shanghai

That night, a storm blew in and delayed our flight to Shanghai by several hours. When we finally arrived, probably around 2am, we were met by a local tour guide who suggested that we might like to sleep in the next day. This was met by a resounding ‘NO!” from the group. We had only a single day and night in Shanghai, and we were determined to make the most of it. As a compromise, the planned 8am kick-off was pushed back to 9am.

Early the next morning, probably shortly after 6am, I slipped out of the hotel and hit the streets. Wary of losing my way, I decided to set a square path, two blocks to the right, and repeat three more times until I returned to the hotel.

My first turn was down a narrow alley, to my first unscripted encounter with a mainlander, a man brushing his teeth. He squatted outside a red wooden door, using a hosepipe no more than a foot off the ground. He was much more surprised to see me than I was to see him, although that first impression is still vivid.

I made my way back to the hotel for breakfast with the group without incident, pleased to have had a chance to see the “real China” up close. Much of the rest of the day was tightly scheduled and closely managed. We toured an old foreign house in the French Quarter that had been turned into a research facility for light goods. Women sat at desks throughout the still-impressive rooms making dolls from clay. They created the faces via a couple of swift gestures with a sharpened piece of wood, and then moved on. I guessed that they were working out the most efficient way to churn out hundreds of dolls a day.

The highlight of the short Shanghai stay was a visit to the Bund, the waterfront “face” of the city. Here, we were turned loose for an hour to relax in the park. Two very special incidents stand out.

My tour companions were mostly middle-aged (and older) Americans, and one young teenage boy. As a group, we were instantly the subject of intense interest, and quickly surrounded by curious folks. One of us had a Polaroid camera, and she took a picture of a Shanghainese woman holding a baby. This was done without asking permission, and elicited a sharp rebuke from the subject. To her great credit, my fellow tourist simply pulled the photo out of her camera and handed it to the woman.

Madam Shanghai snatched the picture, possibly not knowing what it was. She continued to berate the photographer, while gesturing sharply with the hand that held the photo. Slowly, she stopped waving her hand and really looked at what it held: an emerging Polaroid picture of her and her child. In a second, her attitude changed from outraged victim to grateful recipient of what might well have been a priceless gift. Mrs Tourist then took another photo, of the woman with tears in her eyes. That one, she kept.

The second incident arose from my own determination to find one of the most important buildings in modern Shanghai history: Communist Party Headquarters. As I set out at a brisk pace, the teenage tourist asked if he could come with me, and I agreed with a warning that I was on a very specific mission. No problem; he just needed time away from his family.

We half ran down the long row of colonial architecture buildings that lined the waterfront. Building after building, I studied the plaques bolted onto the walls. This one is a bank, that one a government office, the next an unfamiliar character followed by “social association.” Then, I found it: Party Headquarters, the place where Mao Zedong’s wife, Jiang Qing, and her “Gang of Four” cronies orchestrated the Great Proletarian Cultural Revolution.

Wow. For a student of modern Chinese politics, the Cultural Revolution was one of the most important periods. From 1966 until Mao died in 1976, China was consumed by raging “red” politics. Storied veteran revolutionaries were purged, or worse. Young, inexperienced radicals seized power at Mao’s behest, and drove the country into the ground. Deng Xiaoping, one of the top victims, had only just returned to power four years earlier, and it was his China that we were seeing. My studies were becoming real.

Beijing

On to Beijing, and the main body of the trip. We all wanted to see the most iconic places, and because none of us had the slightest idea how to arrange transportation or buy tickets, it was very useful to be corralled into an organized tour group. In four days, we saw the Forbidden City, Tiananmen Square, the blue-domed Temple of Heaven, the garden-like Ming Emperors’ Tombs, the Summer Palace, and the Great Wall.

Each was fascinating, and largely unknown to me. My study was modern China, not ancient. Still, one doesn’t touch the subject without wading through the dynasties and philosophers. Here was the garden where princes drank wine and competed to compose poetry. That building was where the emperor celebrated the harvest. This stone boat was where the navy’s budget was wasted, allowing the European powers to humiliate the Manchus.

Our hotel was the former Soviet Union staff compound, the Friendship Hotel. Here, we encountered the strongest sense of bureaucratic privilege. Staff walked into rooms without knocking, monitored phones and mail, and made absolutely sure that no local Chinese people were admitted. This was my first real taste of authoritarianism, however mild. The staff were also scrupulously honest. My pen ran out of ink, so I threw it in the waste bin. The next day, it was back on the desk.

Some years later, I returned to the Friendship Hotel on a business trip to the city. As I was walking the grounds, I encountered Fred Wakeman, one of my Chinese history professors at Cal. Dr Wakeman was the scholar-in-residence at the US embassy in Beijing, a post that rotated among American scholars so that more of them could have the opportunity to conduct research on a year-long basis.

Recent visitors will be very familiar with the explosion of market capitalism that has engulfed China in the past 40 years. On this first trip, however, there was the state-run Friendship Store, the only department store in town. As tourists, we were very welcome to spend our money there; locals were not.

China’s economists determined early on that foreign tourists were an excellent source of scarce hard currency. However, because prices were so low, there was a two-fold danger: rapid depletion of anything of interest, especially antiques; and inflation. In an attempt to curb these tendencies, foreigners – tourists and residents alike – were compelled to use a special currency, and that money could only be used to buy certain things.

The Foreign Exchange Certificates (FECs) were highly valued by locals, as they allowed the purchase of luxury items from places like the Friendship Store. They remained a part of the economy from 1980 to 1994, but by the later years they were widely available in major cities to anyone will to pay a premium. The exchange rate for FECs was several times higher than that of the common currency, the Renminbi. A meal in a restaurant might cost a local resident the equivalent of $1, whereas a tourist would pay $4 or more. Good hotels, airlines, upper end restaurants, tourist attractions, and the Friendship Store only accepted FEC.

The excursions to the Ming Emperor’s Tombs and the Great Wall were predictably awe-inspiring. Twenty-one years later, in 2002, I had the wonderful opportunity to take my father to many of the same places I visited on this trip. It was great to see his reaction, and to be reminded of my own first impressions.

Tiananmen Square

On our last night in China, we were informed that we would be taken to the world-famous Peking Opera. I had seen these performances in Taiwan, and was not a fan. So, I asked the young woman who was our local guide if I might skip that honor. She was puzzled, but my explanation was accepted. I suggested that what I really wanted to do was to wander around Tiananmen Square. On a hot summer night, thousands of people would bring their blankets and picnic dinners to the square, to enjoy the breeze and meet friends.

Oh, dear. That wouldn’t do. How would I manage? Well, I reminded her, I do speak some Chinese, and I could get a taxi at the Beijing Hotel across the street when it was time to return to our own hotel. Of course! You’re able to take care of yourself! No problem.

That was very surprising. At every other turn, we were strictly controlled, but here in the heart of the nation, I was free to do as I pleased. I spent a very pleasant few hours sitting on the steps of the Monument to the People’s Heroes of the Revolution, a few dozen yards from Mao’s Mausoleum, chatting with people.

Tiananmen Square! The site of so much modern history! Here Chairman Mao stood above the gate to the Forbidden City on October 1^st, 1949, and proclaimed the founding of the People’s Republic. A generation later, he greeted a million teen-aged and highly radicalized Red Guard fanatics, his shock troops in the assault on the power of his colleagues. And, a scant five years ago, workers and intellectuals poured into the square to lay wreaths at the very monument where I was sitting in 1981. They were remembering the recently passed Premier Zhou Enlai, while simultaneously expressing their disapproval of the Gang of Four and their recent re-purging of Deng Xiaoping.

The details of what transpired in my brief talk with the people around me have faded, but I imagine it was mostly “Where are you from?” [American]; “Where did you learn Chinese?” [Taiwan]; and “What do you think of New China?” [Very nice, very clean.] The crowd around me might have been a hundred people, and a one or two used the opportunity to practice their English, but neither of us was equipped to manage much of an in-depth conversation.

Post script

The memories of that first trip to China are still surprisingly fresh, even after all these years and many subsequent visits. My return trip included a layover in Japan, my first of several visits there. Among the most vivid memories of Tokyo were being stunned at how expensive everything seemed to be. The exchange rate was ¥240:US$1, about half what it is today. That meant that a simple meal cost about $10, rather than $20-30 that it would now.

I walked the streets, because I couldn’t figure out the subway or buses. Outside many restaurants were displays of the food on offer, plastic reproductions that looked almost good enough to eat. One place very thoughtfully had prices next to the plates, and since the Japanese and Chinese use the same characters for numbers, I could actually see what it would cost! Great success!

Back in California, I prepared to enter grad school at Cal. During my first week, I invited several classmates to come to my apartment to see the 35mm slides I had taken in China that summer. Very few of our professors had been to China (aside from Professor Shi, the language teacher born in what was then Beiping), and none of the other students. So, I found the way to break the ice and establish a few friendships that lasted many years.

(c) Santa Rosa September 2026

Clearing up loose ends in China

The National People’s Congress is rather slow to complete the purge of the senior officer corps …

August 29, 2026: The legislature voted to remove Zhang Youxia as vice chairman of the Central Military Commission (CMC) of the People’s Republic of China and Liu Zhenli as a member of the CMC.

https://english.news.cn/20260828/7c621e7e9d3545238c0da1e5f6fab40c/c.html

Both Zhang and Liu were ousted in January 2026. 

Note that this is the state CMC, and not the party one. The membership of the two is usually very close, with the defense minister sometimes sitting on the state CMC but not the party version. Conspiracy theorists will also note that the announcement was buried in a statement of several other actions.

Zhu Rongji, RIP.

Hints to Xi Jinping’s grasp of reform era Chinese politics arise in Zhu Rongji’s obit:

• “Under the firm leadership of the CPC Central Committee with Jiang Zemin at the core, Zhu spearheaded reform of the fiscal and taxation systems, carrying out a major overhaul of the tax regime centered on fairer tax burdens and a simplified tax system.”
• “After retiring from leadership posts, he steadfastly upheld and supported the CPC Central Committee with Hu Jintao as general secretary, and then the CPC Central Committee with Xi Jinping at its core.”

Note that Jiang, and Xi, are “core,” but Hu Jintao is not.

US Trade in the First Half of 2026

The United States’ trade with the world increased 5.3% in the first half of the year, as compared to January-June 2025, to more than $3 trillion. Exports grew 15.4% to $1.25 trillion while imports fell -0.8%, to $1.78 billion. The trade balance improved by $181.7 billion, to -$534.8 billion.

Blame China.

Imports from the Middle Kingdom fell by -22.8%, or -$38.3 billion, more than making up for +1.4% rise in purchases from other Asian economies. Much of the shortfall relocated to Vietnam, where sales to the USA rose 39.5%. Combine the two, and there was only negligible change.

The other large movement was in sales from the EU to the US. Imports from the large European customs union fell -22.2%, largely – but not exclusively – because of a $30 billion surge in March 2025. That uptick was purely political: dodging tariffs, long since repealed.

As always, fred.stlouisfed.org has the details.

The US Economy Thus Far

The US economy slowed to +2.1% in the second quarter of 2026, after rising +2.7% in January-March. Both figures are inflation-adjusted, and year-on-year calculations. The quarter-to-quarter annualized figures were +2.1% in Q-1 and +1.5% in Q-2.

Private consumption expenditure, where three-quarters of the growth originated, expanded slightly faster in April-June than in the first three months of the year: +2.3% vs. +2.1%. Capital investment also rebounded, from -1.2% in Q-1 to +3.3% in Q-2. Non-residential (think: A.I. data centers) construction rose +6.1%, and equipment investment by +10%.

On the trade front, exports rose +5.3% (goods +8.4%, services -0.1%) while imports increased by +4.2% (+4.9% and +1.6%, respectively). Federal defense spending was inexplicably depressed (-0.3%), while non-defense outlays fell by -5.9%, identical to Q-1.

Prices, as measured by the personal consumption deflator, rose +3.9% from +3.1% in the first three months of 2026. Across the broad economy, the deflator grew +4.3%, a full point higher than in the previous quarter. The stand-out price marker was gasoline and other fuels: +32% in price, but down -1.4% in volume terms.

In the first half of the year, the economy grew by +2.4%, with private consumption up +2.2% and capital investment by 1.0%. Domestic demand, however, where imports are added and exports subtracted (the opposite of GDP calculations), was up a pathetic +0.4%.

First half 2026 US trade

US merchandise trade increased +15.9% YoY in June, with two-way commerce coming in at $510.9 billion. Exports were up +14.8%, to $204.7 billion, and imports by +16.6%, to $306.2 billion. Over the course of the first half of 2026, trade was up +2.8%, with exports (+14.9%) far out-shining imports (-4.4%).

The dramatic turnaround in imports in the second quarter – from -13.1% in January-March to +14.0% in April-June – were mainly due to the purchase of foreign-made capital goods (presumably, for A.I. data centers). Exports expanded at near identical rates in each quarter: +15.2% and +15.4%, respectively.

​All else remaining equal (it never is), these figures point to a slowing of economic growth in Q-2. That data will be available July 30.

Purging the Politburo

Chinese Communist Party (CCP) Secretary General Xi Jinping has been on a mission to drive from office anyone who crosses him. For many decades, the senior-most members of the party have been immune from prosecution for mere financial crimes, and only severely punished for daring to challenge the boss.

That changed this month when Xinjiang CCP Secretary and Politburo Member (PB) Ma Xingrui was drummed out.

Here’s a list of the highest ranked purge victims since the 1989 Tiananmen Square Massacre.

9/95– Chen Xitong (陈希同). Beijing CCP Secretary (10/92-9/95), Mayor (4/83-1/93), State Councilor (4/88-). 12^th Central Committee member (CC).

9/06– Chen Liangyu (陈良宇). Helicoptered from 15^th CC Alternate (CCa) to 16^th PB. Shanghai CCP Secretary (10/02-9/06), Mayor (12/01-2/03), Deputy Secretary / Vice Mayor (1996-2001/02).

3/12– Bo Xilai (薄熙来). Son of Elder Bo Yibo. 15^th CC, 16^th PB. Commerce Secretary (2/04-12/07), Chongqing CCP Secretary (11/07-3/12). Major challenger to Xi Jinping for party leadership.

3/13– General Xu Caihou (徐才厚). Military Affairs Commission (MAC) Vice Chair (3/05-3/13), PLA General Political Department Director (11/02-9/04), MAC Discipline Inspection Commission (DIC) Secretary (12/00-11/02), 16^th Group Army Political Commissar (PC), People’s Liberation Army Daily Chief Editor, Jinan Military Region (MR) PC. 15^th CC, 16^th Secretariat, 17^th PB.

1/15– Zhou Yongkang (周永康). Politburo Standing Committee (PBSC) member (10/07-11/12), Central Political and Legal Affairs Commission Secretary (10/07-11/12), State Councillor (1/03-1/08), Public Security Minister (12/02-10/07). Highest ranking purge (bribery) since 1976.

7/13– General Guo Boxiong (郭伯雄). MAC Vice Chair (3/03-3/13), Army Deputy Chief-of-Staff (9/99-3/03) Lanzhou MR (1997-9/99), Commander, Beijing MR Deputy Commander, 47^th Group Army Commander. 15^th, 16^th CC, 17^th PB.

9/23– General Wei Fenghe (魏凤和). Defense Minister (3/18-3/23), State Councillor (3/18-3/23), PLA Rocket Force Commander (10/12-9/17). 17^th CCa, 18^th, 19^th CC.

10/23– General Li Shangfu (李尚福). National Defense Minister (3/23-10/23), State Councillor (3/23-10/23), PLA Equipment Development Department Director (9/17-10/22), Deputy Director (2014-16), China Manned Space Program Commander (9/17-10/22).

7/17– Sun Zhengcai (孙政才). Chongqing CCP Secretary, Jilin CCP Secretary (11/09-11/12), Agriculture Minister (12/06-12/09). 17^th CC, 18^th PB

10/25– General He Weidong (何卫东). MAC Vice Chair (10/22-10/25), Eastern Theater Commander (12/19-1/22), Western Theater Commander (2/16-12/19), Shanghai Garrison Commander (3/14-2/16), Jiangsu MD Commander (7/13-3/14). Helicoptered into 20^th Politburo from nowhere.

11/25– Ma Xingrui (马兴瑞). Xinjiang CCP Secretary (12/21-7/25), Guangdong Governor (12/16-12/21), Shenzhen CCP Secretary (3/15-12/16), aerospace engineer. Ma was expelled, and his purged confirmed, only in July 2026.

1/26– General Zhang Youxia (张又侠). MAC Vice Chair (10/17-1/26), Equipment Development Department (1/16-8/17), General Armaments Department Director (10/12-1/16), Vietnam Veteran. 17^th , 18^th , 19^th , CC, 20^th PB

Inflation in America

Americans paid +3.5% more to keep body and soul together in June, as compared to a year earlier. The figures for the second quarter (+3.8%) and for the first half (+3.5%) reflect above trend rises in April (+3.8%) and May (+4.2%).

Electricity cost +4.2% more, gas +2.1%, #2 Fuel Oil +36.1% (and up +47.1% in the second quarter), and gasoline +26-27%, depending on octane levels. Spaghetti, long the contrarian, rose in price by +3.7%, but remains down (-1.1%) in the first half of the year. Bread (-2.7% for the white stuff) and flour (-5.2%), were comparative bargains. American cheese was down -8.2% and ice cream -8.3% (yay!). A dozen Grade A eggs cost $2.14, down -43.3% from a year ago and -54.1% over the first six months of 2026.

In the healthy eating aisle, oranges were -5.7% less pricey and bananas -1.4%. Tomatoes, now $2.15/lbs, were up +24% in June, and +40.1% in the second quarter. Potatoes, the most versatile of all vegetables (baked, fried, sautéed, boiled, or distilled … are the other veggies even trying?), were down -5.9%.

At the dinner table, ground beef was up +11.5-+12.8% (depending on fat content), beef roasts +15%-+16.5%, and ham +2.4%. Chicken buck, buck, bucked the trend: whole birds were -2.0%, and legs -7.0%, as compared to June 2025.

Coffee, however, was up +16.3% last month, and +26.2% in the first half.

In the services sector, transportation was up +6.2% in June, medical care +1.9%, rent +2.8%, and internet and telecoms services +1.8%.

And that, my friends, is why you’re feeling less well-off.