China's security chief, Zhou Yongkang, a member of the Politburo, has told provincial officials they need to be more prepared for the "negative impact" of slowing growth. He is forecasting that the slowdown could bring social unrest.
The Financial Times reports that unrest is growing. Workers are worried about the economic dislocation caused by Beijing's long-term plan to move away from low-value manufacturing to more creative and innovative industries. There have been clashes with police and strikes and the FT says the Chinese government is worried. "The ruling Communist party relies on rapid economic growth as its main source of legitimacy and Chinese leaders assume that if the economy slows too much it will be unable to contain the resulting social unrest. Many analysts believe double-digit inflation and an economic slowdown were important contributors to the 1989 Tiananmen Square upheaval and resulting massacre. In the midst of the 2008 global financial crisis the government identified 8 per cent gross domestic product growth as the level necessary to avoid political chaos and mobilised the entire state sector in a successful effort to 'protect 8'.
Xinhua reports him telling Chinese leaders they need to upgrade their social management. With The Wall Street Journal telling us that China is heading for a hard landing, you can bet the social unrest will continue. The big concern is that China's leader chose to create capitalism first, and allow the political reforms to evolve over time. Call it a controlled revolution. But if the economy suffers, the control will fall apart.
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