Cue the ominous horror movie music: news reports from China keep getting bleaker. Experienced China watchers have seen an economic slowdown on the horizon for some time now, and the potential for political unrest is rising. The indispensible Financial Times reports:
Beijing has underlined its concern that an economic slowdown could lead to social unrest in China, with the country’s security chief urging local officials to do more to prepare for the “negative effects of the market economy”…His comments are the clearest sign yet that Beijing is worried that the global economic crisis could lead to serious domestic social unrest. Mr Zhou’s remarks, published by the state-run Xinhua news agency on Saturday, came at the end of a week which saw evidence of a slowdown in Chinese manufacturing, an easing in credit policy to avert a sharper slowdown, and two outbreaks of violence.
China is not on the brink of disaster, but its transition from an export led, manufacturing powerhouse to a less dramatic but more sustainable growth model is going to be a difficult one, economically and socially. China’s leaders know this better than anyone; they are worried and so should we be.