Chinese Stability Masks Socio-Economic Tensions
Summary:
Disgruntled investors held demonstrations for a second day Oct. 19
in Chongqing, China. The demonstrations were in response to a
government announcement concerning a waiting period for
reimbursement from illegal investment schemes shut down by the
government. The social unrest generated by these schemes - schemes
the government originally pushed - raises a serious issue for
China. While the government focused on maintaining stability during
this year's sensitive anniversaries, the underlying socio-economic
instability continues to mount.
Analysis:
A group of 500 investors demonstrated in Chongqing for the second
day Oct. 19, according to the Information Center of Human Rights
and Democratic Movement in China. The protests followed larger
demonstrations a day earlier when 1,000 to 3,000 investors blocked
railway stations and demonstrated in front of government offices.
The protests were sparked by a government announcement Oct. 17
declaring that it would take up to three years to reimburse lost
investments from illegal investment companies that the government
was shutting down. In addition to protesting the lengthy process of
refunding, demonstrators accused the local government of taking
part in the original establishment of the funds and delaying
notification that the investment schemes were illegal.
China has been beset with low domestic spending and high savings,
something the central government has been working to reverse by
urging domestic investing. This, and the local Chongqing
government's participation in the funds start-up, only adds to the
protestors' anger. The investors believe the government is
complicit, perceiving the delay in returning the money as a move to
keep the booty in the government's own coffers as long as possible.
The protests in Chongqing show the ongoing potential for
economically generated social unrest in China. Throughout the year,
there have been several demonstrations sparked by unemployment,
unpaid pensions and other financial issues. Despite these localized
displays of social unrest, the government has largely maintained
stability during this year of key anniversaries and events. In
fact, maintaining stability in the face of such events as the 10th
anniversary of the June 4 Tiananmen Square incident and the 50th
anniversary of the founding of the People's Republic of China has
been a major government priority.
Oct. 1 passed smoothly, but what now? As the Chongqing protests
demonstrate, the government, while maintaining overall social
order, has not addressed the underlying economic and social
stresses in China. Despite maintaining relative stability by moving
from key date to key date, it is questionable whether this short-
term strategy will remain effective in the long run.
(c) 1999, Stratfor, Inc.
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