Slowing Chinese economy means more instability – The diplomat

At the end of the 19th National Congress of the Chinese Communist Party (CPC), “Xi Jinping’s Thought on Socialism with Chinese Characteristics for a New Era” was enshrined in the Party constitution. Included in Xi’s political theory was the declaration that “” Improving people’s livelihoods and well-being is the main goal of development. “

The Chinese government has been remarkably effective in creating comprehensive development and lifting entire populations out of poverty. Search by Gallup suggests that the poverty rate in China fell from 26% in 2007 to 7% in 2012. But if improving livelihoods and reducing poverty are laudable goals, there may be an ulterior motive to continue to support the economy: New evidence suggests that slower economic growth rates in China correlate with higher rates of protests.

In an undemocratic regime, one of the few ways people can suppress a political institution is mass mobilization. The recent movement of the Arab Spring, which led to regime changes in Tunisia, Egypt and Libya, demonstrates the potential as a catalyst for protest movements. These types of generational protests are relatively rare: the last major protest in mainland China – the Falun Gong protests in Zhongnanhai – happened over 20 years ago.

While large-scale protest movements in mainland China may be rare, strikes and smaller protests have become significantly more frequent in recent years. Chinese Academy of Social Sciences valued in 2006, there were over 90,000 “mass incidents” or demonstrations. Reasons for protest understand forced demolitions, struggles of ethnic minorities, pollution and labor disputes. In particular, there have been few protests for democracy, and the latest round of pro-democracy protests in 2011 faced government repression.

The Chinese government’s fierce reaction to pro-democracy protests indicates that they are seen as existential threats by the CCP. Workers’ strikes, on the other hand, are less likely to be quelled but can still pose a threat to overall political stability: strikes and protests can generate market uncertainty and decrease the productivity of companies whose workers are in employment. strike.

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It is also possible that a labor strike could turn into large-scale protests. The Tunisian protests that led to the overthrow of the government began with the confiscation of a single greengrocer cart by the police. A snowball effect occurred: During the seller’s self-immolation, peaceful protests turned into riots, foreign reports of the regime’s corruption catalyzed further outrage, and ultimately the president been expelled.

So, while strikes and worker protests can normally be mild and usually do not lead to regime change protests, the latent possibility of a snowball effect makes them a priority for the government. And in China, workers’ protests are more and more frequent.

Data on demonstrations and daily strikes in the China Labor Bulletin, a Hong Kong-based nonprofit, demonstrates the growing distribution of strikes over the past seven years. The data is not perfect: the group Remarks that because it only takes into account protests and strikes reported on social media or from official sources, they probably garner 5-10% of workers’ collective action. Likewise, since their sampling rate may change over time, the China Labor Bulletin cautions against comparisons over time.

While trends should be taken with caution, due to the paucity of other data on protests and strikes in China, data from the CLB can be used to gain insight into otherwise obscured events. Looking at the distribution of protests and strikes over time, the rise and fall in frequency towards the start of 2016 is particularly noteworthy.

This increase in the frequency of protests comes around the same time that China’s economic growth rate has plummeted. Continuing this and aggregating the data by month, there is a clear and negative correlation between quarterly GDP growth and the monthly frequency of protests and strikes. In other words, as China’s economic growth slows, the number of worker protests increases. The direction of the correlation is controversial: while a declining economy can cause more protests, more protests can also cause a declining economy.

The research of John Dinardo and Kevin Hallock indeed suggest that strikes have historically had the ability to impact industry stock values. By analyzing the responses of the US stock market from 1925 to 1927, they found that longer, more violent, and industry-wide strikes were associated with negative reactions to stock prices. However, this may not apply to China: A previous analysis I conducted with Cole Tanigawa-Lau after the Umbrella Movement protests in Hong Kong found that there was no discernible stock reaction. attributable to protests. Likewise, while there are tens of thousands of protests, there is as yet no clear evidence that the protests are the causal factor in declining GDP growth rates.

Most analysts predict that the Chinese economy to slow down In the years to come. If the trend of the past seven years continues, slowing economic growth will lead to more protests. As many political scientists have noted, because protests in undemocratic regimes are one of the few ways to usurp power, it is a cause for concern for the Chinese government. Indeed, if this data is correct and there was a spike in protests in late 2015 and early 2016, this could have been one of the reasons Xi Jinping achieved unprecedented levels of power in post China. -Mao.

Despite the increasing frequency of protests, the chances of protests leading to a change of Chinese government are slim. Compared to the protests of the Arab Spring, for example, there is no shared political point of view unifying the protesters against the government. The Chinese government has also made headlines for its investments in population control measures, using new technologies to track movement, both physical and online. Yet rising protest rates may be a harbinger of larger and more impactful protests to come.

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Tyler Headley is a research assistant at New York University. His writings have been published in publications such as Foreign Affairs and The National Interest.

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