China Watch

Joshua Kurlantzick’s analysis of how the global economic crisis will affect the Chinese regime is well worth your time. One of the lessons of the current mess is that so-called “decoupling” – the theory that emerging markets were no longer dependent on the major economies – has been exposed as false. As the saying goes, we’re all in this together. As U.S. consumption dwindles, Chinese production dwindles too. This means major layoffs in Chinese factories, and growing political instability in China. Kurlantzick:

As the economy turns sour, protest is rising. Many young Chinese have never even lived through an economic downturn. In the Pearl River Delta, months of layoffs are sparking street protests by blue-collar workers fearing they’ll never see back pay owed to them and creditors furious at factory owners who shut their doors and vanish. These demonstrations are turning violent, and ultimately could provoke a violent response, since Chinese factory owners increasingly hire thugs to hit back at demonstrators. Overall, demonstrations are spreading, according to Radio Free Asia, which closely follows the Pearl River Delta. Though China has in recent years weathered thousands of protests, they tended to be clustered in poor, rural areas, not the prosperous Delta or other middle-class regions of the country.

Economic instability leads to political instability. That is one of the lessons of the Great Depression. Will declining economies in Russia, China, and Iran makes those countries’ leaders more cautious, or more adventurous? More liberal, or more oppressive? We don’t know the answer. We do know that it is already a dangerous world. And that the global economic downturn makes it more dangerous still.

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