What if they gave an award and the recipient didn’t show up? As we all know, that’s what happened last year when the Nobel committee set up an empty chair for the imprisoned Liu Xiaobo, infuriating the Chinese government, which saw the committee’s choice of Liu as an act of provocation, something that caused China a lot of hurt feelings.

What followed next was a vintage only-in-China fiasco, in which a group in China quickly created the “Confucius Peace Prize,” presented as China’s version of the Nobel, which they awarded to former Taiwan vice-president Lien Chan, who didn’t want it. Once more, there was “an empty seat,” and China once again had its feelings hurt by the ridicule this created.

Now it seems the ill-conceived Confucius Peace Prize is in jeopardy.

The Confucius Peace Prize, which started last year and was widely heralded as China’s Nobel Peace Prize, faces the prospect of cancellation this year, as an official group reportedly behind it has denied any ties with the award.

When the prize was announced on Sept 17 last year, one of the organizers was Wang Shenggui, a division chief for the Beijing-based Association of Chinese Local Art.

However, according to a recent statement, the group said Wang was acting outside of his official capacity, and that plans to start the award were never discussed with association heads, who answer directly to the Ministry of Culture.

“Wang didn’t tell us anything about the prize,” said Zhang Houbang, the association’s standing vice-president.

The group only became aware of it through media reports, he said, adding that the ministry called him on Sept 19 to demand an explanation.

Zhang stressed that the association’s focus is limited to promoting Chinese art, and that Wang’s involvement in the prize was not allowed.

Wang was subsequently dismissed for violating the rules, while his division, which focused on the preservation of traditional culture, was scrapped, said the statement.

This is what we call a train wreck. Everything the CCP has done to suppress the Liu Xiaobo story has only succeeded in keeping it front and center. The Confucius prize only exists, of course, because of Liu, and any coverage it gets dredges up the embarrassment China suffered with the empty seat in Oslo. Now once again China faces smirks as the world witnesses the internal disarray that seems to spell the end of the Confucius Peace Prize. And once again, the story of Liu’s imprisonment and his wining the Nobel prize gets churned up all over again.

I’m not making any comment for or against Liu; we’ve discussed that many times here. This is a story of incompetency and gob-smackingly bad public relations. How could the Confucius Peace Prize have been trumpeted with such fanfare last year if it was never blessed by the government? Something doesn’t add up, and the only thing that emerges as crystal clear is the government’s complete mishandling of something they should have known would result in international ridicule. Well done.

These guys are geniuses.

Tom Friedman, one of my least favorite columnists, has a worthy enough (if typically simplistic) column today about the need for China to embrace political change. It all boils down to economics. The country simply can’t prosper until it’s instituted meaningful political reform.

Can China continue to prosper, while censoring the Internet, controlling its news media and insisting on a monopoly of political power by the Chinese Communist Party?

I don’t think so. To be sure, China has thrived up to now — impressively — by permitting its people only economic liberty. This may have been the sole way to quickly take a vast country of 1.3 billion people from massive poverty to much-improved standards of living, basic education for all, modernized infrastructure and even riches for some urbanites.

But the Nobel committee did China a favor in sending the tacit message with its peace prize: Don’t get too cocky and think that you have rewritten the laws of gravity. The “Beijing Consensus,” of economic liberty without political liberty, may have been a great strategy for takeoff, but it won’t get you to the next level. So this might actually be a good time for Beijing to engage peaceful democracy advocates like Liu [Xiaobo], who is now serving an 11-year sentence, or the 23 retired Chinese Communist Party officials who last week published an open letter challenging the government to improve speech and press freedoms.

As China ages, Friedman contends, it has to move from low-wage manufacturing jobs to more “knowledge- and service-based jobs.” Has to. So you have the usual conflict: a government that wants to control everything and shape its people’s thinking, countered by market forces – China’s growth can only go so far without a problem-solving, innovative workforce.

Dovetailing with this column today is this new piece by my friend and fellow blogger Paul Denlinger on why Wen Jiaobao is thinking along the same lines, and why he will push for more political reform. Denlinger argues that you can’t balance so much social change with so little political change. I’ll just snip two of his seven reasons as to why this is so.

4. China’s president, Hu Jintao, is obsessed with social harmony and stability as his legacy, but Wen thinks that this is a pipe dream. Wen thinks that social change is happening faster than the party, government leadership understand.

5. Wen feels that the current leadership continues to think that economic growth is the answer to China’s problems when past growth rates are no longer possible.

This topic seems to be taking on a life of its own. I think that Liu Xiaobo’s winning the Nobel Peace Prize will continue to fan the flames, and that those who said Oslo’s choice would have no ramifications in China are dead wrong. China’s fate depends on more liberty. Wen knows it, Liu knows it, I know it. Manufacturing can’t and won’t soar forever. What’s next? China has to prepare for the inevitable.