China is facing a number of significant internal challenges, all of which may have a wider impact beyond its borders.
THE People's Republic of China, in its responses to recent events in Urumqi and the alleged actions of Rio Tinto executives in iron ore negotiations, has provided observers with ample opportunity to assess present perceptions and strategic thoughts about the PRC.
The manner in which the Chinese government has responded to these matters has prompted concern from some; however a closer inspection of local economic and security conditions show that its reactions indicate defensive, rather than offensive, intent.
It is now clear that the Chinese leadership considers itself to be under a rolling series of challenges and threats, which have been gaining momentum for the past three-plus years, and has begun reacting to this complex situation with decisiveness and evolving flexibility, and by returning to traditional Beijing approaches to the protection of the leadership and state structures.
The threats are varied in nature and the responses are tailored to each situation, but the overall pattern reflects a growing sense that the PRC leadership itself feels embattled, and that the cohesiveness of the state is threatened by the coincidence of potentially dangerous trends.
China's handling of the Uighur versus Han ethnic unrest in Urumqi, the capital of Xinjiang Uighur Autonomous Region, on July 5 2009, and its handling in July 2009 of alleged espionage by executives of Anglo-Australian mining giant Rio Tinto during contract negotiations, reflect involvement at the highest level of the government, and also reflect a sense of embattlement by its leaders.
Notwithstanding this, the handling of the Urumqi unrest - the worst in Xinjiang in 60 years by the government's own estimate, with 184 people dead and 1,680 more injured - demonstrated a considerable advance in sophistication in terms of perception management operations over the handling of riots and protests in the Tibetan Autonomous Region and adjacent Tibetan-inhabited areas of China in March 2008.
It is important to understand the historical evolution of the trends and threats that preoccupy the Chinese leadership at present, within the context of global changes since the end of the Cold War in 1990-91. The interrelated current trends, which pose concern to the leadership, can be summarised basically as:
- declining domestic economic growth, and geographically patchy economic performance, with direct and strong impact on social stability and cohesion (ie security) in many urban and rural areas;
- growing distrust and concern over the performance and reliability of trading partners responsible for the provision of essential raw materials and the stability of currency values; and
- declining global economic markets for Chinese exports, linked with potential currency instability or weakness among key trading partners, particularly the US (coupled with the perception by Beijing of corresponding strategic opportunities which may emerge from the declining influence and capabilities of the US).
These trends and threats have been manifested symptomatically in the domestic arena by: growing urban unemployment; disruptive population movement to and from urban areas; ethnic and cultural unrest (which by default challenges the authority of the state); growing, and unachievable, social and economic expectations by wide swaths of citizens; and logistical and infrastructural bottlenecks in being able to sustain the pace of imports and modernisation.
Internationally, the global environment has led to a rise in nationalism and protectionism in proportion to the scale of economic threats facing societies. This has been matched, selectively, by China's own expressions of nationalism and protectionism.
At the same time, China perceives that, just as it is under a broad range of economic and social pressures, its trading partners are putting it under pressure in a variety of ways, including what it believes to be blackmail over resource prices and exclusion from entry into foreign capital markets.
Expressed differently, the growing nationalism and protectionism have political and security - as well as economic - considerations. Overall, there has been almost paranoia over China's apparent sense of embattlement and how it must fight for survival.
The valid concerns for China's economic stability are singled out because it is the only great economy that shows the potential for truly severe dislocation over the coming two decades or so. A severe collapse in the Chinese economy - due to domestic population reasons, or because of ecological/resource breakdown, or simply as a result of a recession in the US economy - could precipitate a global economic problem, and, very likely, a military/security outcome for China itself and probably for the East Asian region on a scale that could be pivotal in global history.
At that point, it would be of critical importance as to whether India - the other major economy in emergence through the first half of the 21st century - could replace an imploded Chinese economy in the global marketplace.
The answers to China's challenges all include ensuring stable management of urban populations (in particular), mostly in coastal cities, which are in turn dependent on stable access to petroleum and other energy sources to ensure continued employment (mostly export-driven) and infrastructural development.
Where, then, is all this leading? It seems likely that the Chinese leadership has, to a greater degree than most Western leaderships and international analysts, sensed the urgency and magnitude of the threats that exist to its economic, social, and political stability, and to the stability of many areas of the world.
China's responses, although they may in some instances be reflective of Cold War modalities, cannot be dismissed as paranoia, given the evidence the country is facing first-hand. How the rest of the world responds to China's perceptions, however, may help determine some of the outcomes.
n Gregory Copley is a board and research committee member of Future Directions International.
This is an edited version of an article published in FDI's Weekly Global Report.