By: Our Correspondent

See also: The Ghost of Christmas Future

In Dongguan, an export
center close to Hong Kong, the police last week reported a record
rise in the crime rate – 5,300 cases in the first 15 days of
December – and issued a handbook for residents to protect themselves
from violence, street robberies and break-ins.

The warning came during
the same week that President Hu Jintao gathered China's elite into
the Great Hall of the People to celebrate three decades of economic
change that gave China the world’s fastest growth rate and saw
it turn from a starving country on the edge of bankruptcy into the
world’s fourth largest economy.

It is thus more than
true that there are in reality two Chinas and a government in a race
to see which one will prevail. The global economic crisis has cast a
heavy shadow over China’s success story, with Dongguan and the
rest of Guangdong Province, China’s richest, providing dramatic
counterpoint to the feverish efforts by China’s leaders to
contain the damage.

In November, the
government announced a huge Rmb4 trillion stimulus plan to attempt to
ameliorate the slowdown, and that has been followed up by plans by
provincial governments to add as much as another Rmb10 trillion in
spending. Hardly a day goes by without another announcement of a
major stimulus. Last week was typical.

On Monday, for
instance, the stock market reacted to news that the agriculture
sector would be the recipient of major investments, making rural
areas and residents a top priority in 2009. On Tuesday, the
government announced a substantial boost in spending for the power
grid and construction of nuclear plants. On Wednesday, it announced
import and export tariffs would be adjusted for machinery and

On Thursday, it
announced the launch of yet another stimulus plan to boost real
estate starting Jan. 1. On Friday, the State Council announced it
would cut the fuel consumption tax.

There are questions if
it will work. In a remarkably frank study published last week called
“Analysis and Predictions of Chinese society in 2009.”
the China Academy of Social Sciences set out the three big risks for
the year ahead:

  • Unemployment could
    go as high as 9.4 per cent because of the factory closures caused by
    the financial crisis, the Sichuan earthquake and other natural
    disasters and polluting firms shut by tighter environmental laws.

  • The lack of
    affordable housing has urban residents angrier than any other issue:
    47 per cent of people surveyed said that they lived in bad housing
    and could not afford their own home. “The housing conditions
    of low-income people in large and medium cities is far behind those
    of other groups of the population,” the study said. That is
    being exacerbated by a collapsing housing bubble that may be almost
    as big as America’s. Property prices, down from their peaks,
    still have as much as 20-30 percent to fall before 70 percent of the
    population can afford to buy Both the central and provincial
    governments have announced measures, including cuts to transaction
    costs easier mortgage terms, especially for first-time buyers, and
    extended payment schedules for developers’ land premium
    installments, all to no avail.

  • The increasing gap
    between rich and poor, officials and common people is cause for
    increasing outrage. “These two conflicts are the most likely
    fuses for social conflict,” the survey. 68.8 per cent of those
    surveyed said that, during the last 10 years, officials had gained
    too many benefits, while workers, farmers and migrant workers had
    gained too little: 36.3 per cent said these conflicts would
    intensify in future.

Corruption remains a
major source of discontent, with 39 per cent telling the researchers
they were unsatisfied with the government’s attempts to deal
with it. The study said it was no longer enough to rely on campaigns
and individual leaders to fight corruption and that a new system was
needed in 2009.

Many people in senior
positions are corrupt,” said Lin Qi, a Beijing consultant. “The
wife of Wen Jiabao, a geologist, is the chief valuer of jewellery in

Formerly the
vice-president of the Chinese Jewellery Association, Wen’s
wife, Zhang Peili is president and chief executive of Beijing Diamond
Jewellery Co, which has operations in the mainland and Hong Kong.

“In China,
corruption is part of political struggle,” said Lin. “If
you have strong patrons, you are safe. But, if you lose in the
struggle, then you may be arrested.”

The public is also
angry that children of leaders occupy senior posts in large state
firms, especially in finance and military-related industries. They
see the Communist Party as a giant conglomerate, with dense personal
networks that divide the spoils of economic success. Without entree
into these networks, there is no chance of wealth or promotion.

On the streets, the
government is now facing the consequences of all these
It has been reported widely that in the first
nine months of this year, more than 7,000 Guangdong companies closed
or moved elsewhere, leaving behind unpaid bills and wages. Workers
have taken to the streets to demand what is owed to them.

Last Friday police
locked 300 workers inside the Jianrong Suitcase factory in Dongguan,
to prevent them holding a public demonstration about unpaid wages.
In Dongguan, as in other cities, tens of thousands of migrant workers
have lost their jobs but do not wish to return to a life of poverty
in their home villages. Many have taken to crime.

The city’s police
said that a popular tactic is to rob people as they leave banks or
withdrew money from ATMs and escape on a motorcycle ridden by an
accomplice. Pickpockets are active on the city’s buses,
especially when a traveler is dozing or uses his mobile telephone.
Visitors from Hong Kong, with wallets containing cash, credit cards
and passports, are a major target.

In the handbook, the
police advise people to lock the windows of their cars, carry their
valuables inside their clothes, to not use mobile phones on buses and
not ride in unlicensed taxis.

In his speech last
Thursday, Hu stressed social stability: “without stability,
nothing could be done. Even achievements already made could be lost.”

One threat to the
government is social disorder in the form of strikes, demonstrations
and attacks on police and government buildings. But so far there is
no sign of a Polish-style Solidarity that would co-ordinate the
protests and give them a political focus.

A second threat to Hu
and his government is from those within the party who accuse him of
betraying Socialism and promoting social inequality, corruption and
privileges to foreigners. Where are the ideals of the revolution for
which millions died?

A third threat is from
300 intellectuals who issued Charter 08 on December 10 to coincide
with the 60th anniversary of the Universal Declaration of Human
Rights, calling for political reform, the separation of
parliamentary, executive and legal powers, and freedom of expression
and association.

It is a particularly
scathing document. In part it reads: “By
departing from these values, the Chinese government's approach to
‘modernization’ has proven disastrous. It has stripped
people of their rights, destroyed their dignity, and corrupted normal
human intercourse. So we ask: Where is China headed in the
twenty-first century? Will it continue with ‘modernization’
under authoritarian rule, or will it embrace universal human values,
join the mainstream of civilized nations, and build a democratic
system? There can be no avoiding these questions.

The government promptly
responded by arresting the two main organizers of the charter. Its
nightmare is the Polish and Czechoslovak scenarios, where workers and
intellectuals united, with the support of the US and Western Europe,
to overthrow the party, exploiting popular discontent over many of
the same issues that fester today in China. It nearly happened in the
spring of 1989. The party is busy preparing to prevent a repetition
20 years later, and thus the feverish economic changes now being
pushed forward. The US$2 trillion in reserves that China has in its
vaults give Beijing an advantage that neither Poland nor
Czechoslovakia had available to them.

See also: The Ghost of Christmas Future