South China Morning Post: Inequality 'threatens social explosion'

Three mainland scholars have warned the Beijing leadership that China faces a repeat of the 1989 Tiananmen student uprising or an Indonesian-style social crisis unless stronger action is taken to rein in widespread social injustice and inequality.

A strongly worded report - compiled by Wang Shaoguang, from Hong Kong's Chinese University, Hu Angang, from Beijing's Tsinghua University, and Ding Yuanzhu, of the Sociology Department at Peking University - urges policy-makers to face reality and prevent social upheaval.

The report, "The Most Severe Warning: Social Instability Behind the Economic Prosperity", says China has entered a new phase of social instability as strong social discontent and grievances simmer among the rising number of low-income groups that have been marginalized as the economy develops. It says policy-makers have underestimated domestic challenges and overestimated their ability to handle social crises.

The report also raises concerns over the policies of Premier Zhu Rongji, who has tried to maintain fast economic growth to ensure social stability. It says two kinds of economic growth - unemployment growth and unequal growth - will only brew social instability.

Once economic growth slows or when external shocks take place, China will plunge into turmoil, just as in 1989 or as Indonesia did in 1998, it warns.

The timing of the report, which is published in the latest issue of the academic journal Strategy and Management, is significant, coming as mainland leaders meet in the resort town of Beidaihe to discuss the leadership changes that could happen at the 16th Communist Party Congress this year.
The report says China is facing a harsh environment as it deals with the world's largest economic restructuring, massive lay-offs, the disparity between urban and rural incomes, losses caused by corruption and ecological destruction.

It says the Gini Coefficient, the recognized international measure of income disparity, in China, taking into account tax evasion, corruption and other illegal income, had reached an alarming 0.5. The danger level is 0.4.

The report warns that insecurity over jobs, income and the environment, among others, will cause social instability, as in the case of the outlawed Falun Gong [group], which has absorbed many jobless and retired workers. [Editor's note: People practice Falun Gong because of its benefit for health and healing as well as spiritual uplifting, not because of their dissatisfaction about the social system. Falun Gong practitioners have been peacefully appealing because of the persecution for their belief, not because of their unemployment.]

It says a national survey has found that up to 200 million people are not happy with the status quo. Of these, 32 to 36 million people, representing about eight per cent of urban residents, are extremely unhappy.

Middle-aged, laid-off workers are the main group who have social grievances and feel they have been victimised by government policy blunders. The report quotes a popular verse among laid-off workers to illustrate the widespread discontent: "Mao Zedong makes us farm in the countryside, Deng Xiaoping makes us work in the city, and Jiang Zemin makes us jobless." The report also warns of social polarization.

It says the government is ignoring the social crisis.
"Most worrying is the fact that the leadership is in denial about the reality of the polarisation. China will pay a heavy social and political price for this," it says.

It said the "Theory of the Three Representatives" advanced by President Jiang Zemin had inflated the public's expectations of the Communist Party. The theory holds that the party represents advanced productive forces, advanced culture and the fundamental interests of the people.
If the party failed to deliver on its promises, the mistrust and discontent of the public would be deepened, the report said.

The scholars say the state must ensure an equal distribution of resources to all social classes because the invisible hand of the market will only accelerate the pace of polarisation.