Chinese brace for financial fallout

Analysts assess China's prospects for the year ahead.

    Many unemployed migrant workers are expected to return to the countryside [GALLO/GETTY] 

    In 2008 Beijing wowed the world with a successful 29th Olympiad; it struggled with deadly riots across Tibet; and dealt with a devastating earthquake that killed some 70,000 people in the western province of Sichuan.

    And it looks like 2009 will be another roller coaster ride for Beijing. On October 1, the People's Republic of China celebrates its 60th anniversary. As lavish festivities are being planned, the country is wrestling with an economic downturn that threatens to throw tens of millions of people out of work.

    Financial crisis

    Analysts agree that the financial crunch is going to be China's biggest challenge in 2009. Many academics say it will spark social unrest, but that the one party state has the means to cope.

    The human rights outlook, meanwhile, remains bleak with China continuing to boost its military capacity despite its growing economic woes.

    "The biggest problem for the Chinese Communist Party is the economic slowdown which will cause large scale unemployment, which in turn has implications for social unrest," says He Baogang, a professor at Deakin University's School of Politics and International Studies in Australia.

    "The big problem is that a large number of newly graduated students will not be able to find a job, and if they combine forces with [discontented elements amongst] unemployed migrant workers or other unemployed, that will create a big social force which will threaten the government - so that is something they will be worried about."

    Around 1.5 million graduates were jobless at the end of 2008, says China's official Xinhua News Agency citing a report by the China Academy of Social Sciences.

    Although Yang Shun, a 23-year-old IT student from Shanxi province, has a job with a computer company lined up for next year, he says he is still concerned.

    "I think next year the job market is going to be really tough in China," Yang tells Al Jazeera. "I just hope my new job goes well and I don't lose it!"

    The government will employ a mixture of force and concessions to control any protests, says He Baogang, but he does not foresee unrest escalating out of control.

    Return to the countryside

    A few weeks ago 4,000 officials were called to the capital to be trained on how to deal with "sudden emergencies" such as protests, He Baogang said.

    "They are adopting very cautious, very proactive measures," and they will also dole out money to ease the suffering of the unemployed.

    The fact that the bulk of those laid off will be migrant workers from the countryside will cushion the blow, says Andrew Nathan, a professor of political science at Columbia University in the US.

    "One advantage that the Chinese economy and regime still have is that the laid off workers have the option of returning to the countryside since they are still rooted there," explains Nathan.

    Industrialised countries suffer more because their unemployed are trapped in the cities.

    "The rural areas have considerable absorptive capacity, even though people would be unemployed there and living standards would suffer."

    'Concessions and repression'

    Even if social unrest were to escalate, he adds, the Chinese Communist Party is in no danger of being toppled.

    "There has been and will continue to be a trend of increasing strain in society - demonstrations, strikes, petitions, and so on," he says. "However, I do not think these will easily cumulate into the kind of nationwide movement that could really challenge the China Communist Party's hold on power."

    The pockets of discontent are too "scattered", he says, and the government's strategy of using "a combination of concessions and repression," is very effective at containing unrest.

    Local authorities have "considerable financial resources" and the party maintains "a very effective police system that is able to crack down on opposition." Furthermore, if the protests do not hit Beijing, then the threat is not significant.

    Allan Behm, an Australian security analyst and former government official, also believes that China has the crisis under control.

    "With its foreign reserves, industrial capacity, low cost workforce and tight central control, China will come out of the global financial crisis in a better position than most countries," says Behm. "China has a pretty rosy future, even though the year ahead will be difficult."

    Increasing military might

    China will continue to invest heavily in the development of its armed forces, say analysts, despite the economic downturn.

    The deployment of two Chinese destroyers to the coast of Somalia to fight pirates - modern China's first naval dispatch outside the Pacific Ocean - and hints of building its first aircraft carrier, are two recent signs of the country's growing military ambitions.

    "China is becoming more confident militarily every day," says Behm.

    "China's air and sea power is expanding in terms of both capability and numbers, especially in the 'blue water' (long range) role, and in the submarine arm.  The global financial crisis will not hold China back in those areas."

    Even so, Behm says, he does not predict any China-related military conflicts in 2009. 

    "China will concentrate on restoring its economic performance," he says.

    "It will maintain a very tight control on any form of dissidence domestically. And everyone else will be attempting to reinvigorate their own economies, which will moderate any tensions with China, since they are all so dependent on China's economic performance."

    Human rights outlook

    China's human rights outlook for 2009 does not look rosy, say analysts. At best, things will remain the same; at worst, China's growing confidence and the possibility of social unrest mean that they could significantly worsen.

    Most recently, human rights groups have criticised Beijing for holding Liu Xiaobo, an academic who was formerly jailed for taking part in the 1989 Tiananmen Square protests.

    Rights groups say Liu has been detained since December 9 for signing an open letter signed by over 300 Chinese activists called Charter 08 that criticised the current government's human rights record and called for a move towards democracy.

    Columbia University's Andrew Nathan says the human rights situation will remain bleak but is unlikely to worsen.

    "I think the picture with civil and political rights will remain about the same - political dissent and religious freedom will be suppressed, the press will continue to be under party control, the courts will continue to lack independence."

    Chinese academics, however, stress that individual rights - such as property ownership and the freedom to express opinions at the local level, providing they do not threaten the government - will improve, and the government's legitimacy indeed depends on it.

    "If we look closely at China, the rising of China requires the government to provide more and more protection for human rights, in particular property rights," says Deakin University's He Baogang.

    Improving these rights lays the foundation for social stability, he says, and this will be even more important in 2009 in the turmoil of the economic slump.

    "I think the wider rights of China will continue to improve" next year, he says, while admitting that freedom of speech or the right to challenge the authority of the Communist Party will remain suppressed.

    Other academics take a much bleaker view and see 2009 as a bad year for human rights in China.

    "It certainly seems to be the case" that the success of the Olympics and its increasing global stature has emboldened China to crack down even more severely on signs of dissent, says Michael Davis, a professor of law at Chinese University of Hong Kong.

    He adds: "I would expect human rights to worsen, as the regime comes under increasing pressure."

    SOURCE: Al Jazeera


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