Unrest fears loom at China congress

Wednesday, March 04, 2009

Al Jazeera
By Joe Havely
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The annual National People's Congress brings more than 2,000 delegates to Beijing [Reuters]

As China's parliament gathers for its annual meeting in Beijing, the impact of the global economic crisis and jitters over the possibility of social unrest are taking centre-stage.

It is all very different to just a year ago.

Then, as the 2,000-plus delegates to the National People's Congress (NPC) met in the Beijing's Great Hall of the People, a brash and confident China was preparing to bask in the spotlight of Olympic glory.

The 2008 games were seen by China's leaders as the country's coming-out party - a showcase for the global powerhouse of the 21st century.

But the once white-hot Chinese economy is now rapidly cooling; protests by the ranks of newly unemployed are breaking out; and the sheen of what until recently was called China's "economic miracle" is beginning to crack.

Growth has slowed from 13 per cent in 2007 to just 6.8 per cent in the last quarter.

That figure would be enviable for many in rest of the world, where negative growth and recession are already facts of life.

But it is well below the eight per cent growth China's leaders say is needed to create new jobs for the country's ever expanding labour force.

Without that, they worry rising joblessness will fuel discontent, social unrest and disorder - Beijing's biggest fear.

Brave face

It is these concerns then that will be uppermost in the mind of Wen Jiabao, the Chinese premier, when he delivers China's equivalent of the annual US state of the union speech to the NPC on Thursday.

Delegates to the congress will be expected to put on a show of unity [Reuters]

Speaking before massed ranks of stiff-suited officials, Wen will seek to put a brave face on the gloomy situation and portray a government and a communist party united and firmly in control.

Anyone hoping to see a loosening of the political reins at this year's congress will be disappointed.

Even the relatively tepid "debate" tolerated at recent NPCs will be squashed in favour of an uncompromising show of unity.

Amid simmering discontent, China's leaders worry that even a small relaxation of their grip could see more outbreaks of "mass incidents" - as state media coyly refers to riots and street protests.

Compounding those fears for China's leaders are a series of sensitive anniversaries occurring this year, including the 50th anniversary of an uprising against Chinese rule in Tibet and the 20th anniversary of the Tiananmen Square crackdown.

October will also see the 60th birthday of the People's Republic itself.

Communist officials had hoped to mark the event with lavish parades, but already budgets for the celebrations have been slashed as a result of the downturn.

With times tough, even the banquets usually laid on for visiting heads of state are being cut back.

Chinese officials announced on Wednesday that from now on visiting dignitaries dining at the state's expense will be limited to just one soup, three dishes and no liquor.

Social contract

China's leaders have tied the party's legitimacy and their continued hold on power to their ability to deliver growth, to create jobs and to lift millions out of poverty.

Until recently, for tens of millions of Chinese that had been the reality - an unwritten social contract that the government had largely delivered on.

Fears of unrest and loss of control are the biggest worries for China's leaders [Reuters]

But now many Chinese are seeing their dreams coming undone. Factories are closing, jobs are being lost and the fabric of that contract is coming under strain.

A month ago state officials said that at least 20 million migrant workers had been thrown out of work as a result of the global recession, and signs are that the losses are only increasing.

Last week China's politburo, the communist party's highest decision-making body, admitted that it was facing an "austere and complicated" year.

In party-speak that means China's leaders are getting nervous. Chinese officials do not like to admit they face challenges.

In an effort to lift the gloom they have vowed to ramp up levels of social security, promising to reinstate many of the benefits once central to China's communist economy but which have been lost over the last three decades of reforms.

This year's congress is expected to rubberstamp legislation promising universal access to basic medical, workplace injury and unemployment insurance; as well as retirement pensions.

The government has also outlined a wide-ranging spending programme to "increase large-scale government investment, implement and readjust a plan to revive industries, [and] make great efforts to boost innovations".

It has already pledged a package of stimulus measures totalling some $585bn, but little has been said about how it will be spent.

Now hundreds of millions of Chinese will be looking to Hu's speech and to the NPC to deliver more details and offer firm steps to soothe the national mood.

Close watch

Many more outside of China will be watching closely too.

Simply because of its vast scale China - which recently overtook Germany as the third largest economy in the world - has been seen as a one of the best hopes for turning the global slump around.

The congress will be closely watched both inside and outside of China [Reuters]

If it can maintain at least a respectable 8 per cent plus growth rate, the theory goes, then the spending power of China's masses could just be enough to help spur a recovery.

That too is the hope of China's leaders as they look to change the country's engine of growth away from export manufacturing and towards domestic consumption.

The country's heavy reliance on export manufacturing to fuel its growth has been both a blessing and now - as global demand has dried up - a curse.

In January exports plunged by 17.5 per cent, as demand in key markets such as the US and Europe dried up.

Now the government hopes that by increasing social security Chinese will be inclined to spend more, raising domestic spending and lessening the country's vulnerability to the vagaries of far-flung exports markets.

It is a big hope and there are no guarantees that this will prove the spur that is needed.

The biggest worry of course is that the opposite may occur - that the stimulus measures fail, the upbeat talk has no effect, spending stalls, and China's economy goes into meltdown.

For China's leaders, failure is not an option.