Saturday, January 10, 2009

China braces for a tumultuous year

China will celebrate the Year of the Water Buffalo on 26 January 2009.

Judging by press reports so far, the leaders are bracing themselves. They know there will be some heavy hauling to do to if they are to keep their jobs.

The dirty work began early. On 2 January, FT reported that the "Chinese government is moving to crush a group of prominent dissidents and intellectuals that has released a rallying call for democracy, human rights and rule of law." The article continues:

Since then, nearly 7,000 Chinese and foreign intellectuals inside and outside the country have signed Charter 08, which warns of “the possibility of a violent conflict of disastrous proportions” if Beijing does not quickly move to reform the one-party authoritarian state.

Chinese intellectuals and dissidents are calling the document the most significant of its kind for at least a decade and possibly since the 1989 Tiananmen Square protests. Its name is a reference to Charter 77, the 1977 call for human rights issued by dissidents in former Czechoslovakia.

On 9 January, FT reported that China had moved to crackdown on the Internet. The crackdown is said to be against "vulgar" content. Some "19 sites including search engines Baidu and Google" have been accused of "undermining public morality." The article notes that
The campaign coincides with efforts to stifle dissent and protest as the economy slows and China enters a year of sensitive anniversaries, especially the twentieth year since the bloody crackdown on pro-democracy protests in Tiananmen Square in 1989.
An FT report of 8 January exposed what is probably the Chinese leadership's biggest concern:
The rapid deceleration of economic growth in China as a result of the global recession will severely test Beijing’s ability to maintain social stability at a time when the unemployment rate, especially among university graduates and migrant labourers, is soaring. . .

Based on surveys by Chinese sociologists, only about half of the jobless migrant labourers have returned to their native villages, leaving roughly 5m unemployed, mainly young, migrants in urban areas (the number is expected to rise significantly this year). Chinese graduates, most of them the only child of their family, are among relatively privileged members of Chinese society. Unlike the proletariat in moribund SOEs, Chinese graduates harbour powerful individual ambitions, possess strong organisational skills and have a tradition of challenging government authorities.

Worse still, both unemployed migrant labourers and graduates will be concentrated in urban areas throughout China. Although the countryside has traditionally been more volatile and less governable, Beijing is far more concerned with stability in the cities, where the economic and political centres of gravity are located. So the combination of millions of low-status jobless migrant labourers and unemployed graduates could form a highly combustible mix.

Unfortunately, Beijing’s Rmb4,000bn (€430bn) stimulus package is excessively focused on investment in infrastructure. Roughly three-quarters of the spending is slated to go into railways, roads and other capital-intensive projects. While infrastructure spending can help absorb some of China’s overcapacity in heavy industries (especially steel), it will have a negligible impact on generating employment for jobless migrant labourers and graduates.

It looks as if Chinese leaders are going to need to be sturdy as water buffalo just to keep themselves at the helm. This year promises to be an eventful one in China.
Photo of Laotian water buffalo by Jotman.

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