Social Instability in China

Concern over social instability remain the primary guide for the leadership as it fine tunes the pace and scope of its reform and development efforts. Economic development and assertive nationalism remain the twin pillars on which Party legitimacy rests, with no solid ideological consensus to shore the regime up in times of national crisis. The leadership's social contract with the Chinese people is fragile. A major economic setback or inability to manage nationalistic expectations could lead to serious social, or even political, instability.

The Party's heavy reliance on economic growth, expanding opportunities and continued improvement in people's living standards with no sustaining ideological consensus to help weather crises suggest that the "social contract" is fragile. A major macro-economic or geo-political shock that could mobilize large numbers of people from politically strategic sectors of the population would present a major challenge to the regime. Severe unemployment in growth industries, a period of serious inflation, or a humiliating international incident are examples of events that could potentially spark a strong backlash against the Party. These are events that would test the loyalty of the Party's base -- Party members and government functionaries -- and of urban elites and workers in critical industries who passively acquiesce in the Party's claims to political supremacy because they have benefited most from the upward mobility and prosperity of the reform era.

Further potential challenges to regime stability could result from external political shock, such as an incident of national humiliation. National humiliation or a failure of the regime to stand up for national dignity, especially if Beijing backs itself into a situation where it is compelled to use military force and suffers defeat, could trigger a severe anti-Party backlash from key segments of the population on which the regime bases its support. The most visible possible scenario for this to occur in the near term is a showdown with the United States over Taiwan, but there are other potential danger points as well, such as disputes over oil and gas fields in the South China Sea or near Japan. Such a scenario could lead to a splintering of leadership solidarity as factions seek to divert blame.

China's leadership has taken great steps to silence any discussion of the events of 1989, the massive protest rallies that took place that spring in Beijing and other cities and the bloody crackdown that followed. Even so, the demands of the students and citizens who poured out onto the streets at that time have not gone away. Inflation, because it has helped spark the dreaded "social instability" in the past (e.g., 1989) and presumably could do so again, is a key concern of the Chinese Government.

The government’s great fear is probably second to none all over the world. Leaders of the government seem to share similar feelings, all worrying about social instability and considering stability as an overriding goal at present. Beijing will become a city of policemen whenever there are ceremonies. On one hand, people’s living standards are improved. On the other hand, people feel lots of grievances. Street quarrels are frequently seen, as many people now get angry easily and are ready to quarrel at the drop of a hat.

The Party closely monitors all activity and groups it perceives to be potentially destabilizing, and has demonstrated impressive resilience and adaptability in maintaining its power in the face of growing social and economic problems. Despite tens of thousands of demonstrations and protests every year, mostly in rural China and mostly over corruption involving land grabs, the protests remain localized and citizen wrath is still directed at local, not national officials or the Communist Party itself. Moreover, the protests have not thus far been part of larger coalitions that cross local jurisdictions or involve linkages across social sectors or classes.

The regime intervenes vigorously to prevent protests from crossing jurisdictional lines. The authorities have kept the lid on the simmering pot of social instability through shifting tactics and a mixture of populist rhetoric, monetary compensation, high-profile sacking of the most egregious examples of corrupt or incompetent officials, and, when deemed necessary, lethal force. Some tactics are coercive, such as when People's Armed Police fire on rural demonstrators. Security forces crack down quickly and severely on any sign of organized dissent or separatist activity by such groups as the quasi-Buddhist sect Falungong, the underground China Democratic Party, or Tibetan and Uighur activists calling for independence.

Paradoxically, despite generally positive attitude patterns, successes create rising expectations that in turn pose a challenge to the Party's ability to adjust to social change. For example, the new, urban elite appear to be increasingly willing to engage in organized public protest to protect their interests against unfavorable government actions.

Repression and coercion, particularly against organizations and individuals involved in civil and political rights advocacy and public interest issues, ethnic minorities, and law firms that took on sensitive cases, are routine. Increasingly officials employ harassment, intimidation, and prosecution of family members and associates to retaliate against rights advocates and defenders. Individuals and groups seen as politically sensitive by authorities continued to face tight restrictions on their freedom to assemble, practice religion, and travel. Authorities resorted to extralegal measures such as enforced disappearance and strict house arrest, including house arrest of family members, to prevent public expression of independent opinions. Authorities implemented new measures to control and censor the internet and particularly targeted bloggers with large numbers of followers, leading some to close their online accounts.

Government officials continue to deny holding any political prisoners, asserting that authorities detained persons not for their political or religious views but because they violated the law. Authorities, however, continued to imprison citizens for reasons related to politics and religion. Tens of thousands of political prisoners remained incarcerated, some in prisons and others in RTL camps or administrative detention. The government did not grant international humanitarian organizations access to political prisoners. Foreign NGOs estimated that several hundred persons remained in prison for “counterrevolutionary crimes,” which were removed from the criminal code in 1997. Thousands of others were serving sentences under state security statutes.

Rising income gaps and other domestic imbalances are factors leading to social instability. As people lose confidence in the ability of governments to restore stability, protests and social instability are increasingly likely. Inflation remains a worry for Chinese leaders, as they believe significant consumer price rises could spark social instability among low and fixed-income groups.

The Chinese may have a nationalistic reputation, but when asked to pick their ideal country, more than a third are looking to the US, according to a 2014 survey by advertising group WPP. It’s a stark contrast to the results in the US and Britain, where respondents mostly chose their own country as ideal, both now and a decade from now.

Development gaps are the primary reason for social instability in China, which includes cultural gaps, institutional gaps, regional economic gaps, functional gaps, psychological gaps, and so on. All of these aspects contribute to the accumulation of explicit and implicit social instability, and among all the factors, the cultural gap is an underlying factor. Culture value is an important part in people's spiritual life, which could determine people's attitudes and inclinations, establish moral standards and norms for behavior, and provide criteria for social interactions and relationships.

China is a unified multi-ethnic civilization state with a large population and vast territory. This feature shapes culture diversity both in terms of ethnic groups and regional populations. In the context of economic globalization and domestic modernization, Socialist China at its initial stage reduced various formes of exploitation and oppression from its institutional root and endowed people across the country with unprecedented equality and prosperity. However, due to complex factors involving physical geography and history, inequality or incomplete ethnic equity still exist.

In the late 1970s, China began to adopt the reform and opening-up policy, introducing the idea of letting partial people and regions become wealthy first. In order to adjust the distribution of social wealth and narrow the gap between the rich and the poor, the Chinese Government imposed the personal income tax on the first group of wealthy citizens in accordance with international practices. The money was used for social development and supporting the poor.

At that time, the government fixed the minimum taxable amount of personal monthly income at 800 yuan ($99), which represented a high income that far exceeded the average monthly income of ordinary wage makers. However, with the rapid development of the country’s economy, the amount of 800 yuan ($99) gradually became a low income bracket. In 1993, only 1 percent of the Chinese population earned 800 yuan a month. By 2002, however, the rate had jumped to 52 percent. By 2005, the majority of Chinese breadwinners earn between 800 ($99) and 5,800 yuan ($715) a month, and they contribute the bulk of personal income tax. Those with a monthly income of more than 5,800 yuan ($715) account for less than 2 percent of the population.

During the course of time, the Personal Income Tax Law did not kept pace with Chinese citizens’ ever-changing personal income. Warnings by the Ministry of Labor and Social Security that the ever-widening gap between the rich and the poor would lead to social instability has spurred China to find suitable methods to solve this growing dilemma. As a move in this direction, by 2005 the Chinese Government was in the process of amending its Law on Personal Income Tax.

By 2014 a study by American scholars suggested that income inequality in China has surpassed that in the US by a large margin and is among the highest in the world. Although the government has shown it is serious in dealing with the issue, observers warn that the severe inequality is undermining China's economic development and risks triggering more social instability. Xie Yu and Zhou Xiang, of the University of Michigan, calculated China's Gini coefficient, based on surveys conducted by five universities in China. China's income inequality since 2005 had reached very high levels, with the Gini coefficient in the range of 0.53-0.55. In 2010 the figure in the US was 0.45. A study by the Southwestern University of Finance and Economics in Chengdu, Sichuan Province, put the Gini coefficient for family income in 2010 at 0.61.

Social stability in rural areas "looks calm on the surface, but there are sea monsters lurking below". When viewed separately, the respective Gini coefficients of both urban areas and rural areas are smaller than 0.4. However, when viewed together, the inequality between urban areas and rural areas turns out to be rather dramatic. Incomes in cities are growing at 8-9 per cent annually, while the rate in rural regions has averaged a year-on-year growth of 4-5 per cent. In 2008 the average annual income for rural residents reached 2,936 yuan (US$355), far behind that of urban residents, whose average annual income was 9,422 yuan (US$1,139) in 2004.

The contrast in needs is stark. In China’s eastern developed areas, a monthly income of 1,500 yuan ($185) only takes care of essential daily expenses, plus occasional entertainment requirements. In less-developed western areas, the same income means a very comfortable lifestyle with sufficient money available for personal savings. In the past 1995-2005, the gap between the rich and the poor widened. Currently, China’s Gini coefficient (an internationally accepted measurement of income equality) has reached 0.447. According to internationally accepted standards when the Gini coefficient reaches or exceeds 0.4, it means a country’s rich/poor gap is excessively wide.

Although the government maintained restrictions on the freedom to change one’s workplace or residence, the national household registration system (hukou) continued to change, and the ability of most citizens to move within the country to work and live continued to expand. Rural residents continued to migrate to the cities, where the per capita disposable income was more than four times the rural per capita income, but many could not change their official residence or workplace within the country. Most cities had annual quotas for the number of new temporary residence permits that could be issued, and all workers, including university graduates, had to compete for a limited number of such permits. It was particularly difficult for rural residents to obtain household registration in more economically developed urban areas.

The household registration system added to the difficulties rural residents faced even after they relocated to urban areas and found employment. According to the 2012 Statistical Communique of the People’s Republic of China on 2012 National Economic and Social Development published in February by the Ministry of Human Resources and Social Security, 279 million persons lived outside the jurisdiction of their household registration. Of that number, 236 million individuals worked outside their home district. Many migrant workers and their families faced numerous obstacles with regard to working conditions and labor rights. Many were unable to access public services, such as public education or social insurance, in the cities where they lived and worked because they were not legally registered urban residents. Poor treatment and difficulty integrating into local communities contributed to increased unrest among migrant workers. In 2012 Chinese Academy of Social Sciences’ researchers estimated that the prevalence of informal employment ranged from 20 to 37 percent overall, based on the definition used, with between 45 and 65 percent of migrants employed in the informal sector.

The severe income disparity has been triggering social instability, a challenge that governments at various levels have devoted enormous resources to contain. In recent years, the country has seen a wave of strikes, mostly due to workers becoming aware of disparity. Although people may have a variety of outward reasons why they are staging mass protests, income inequality is a major motivation behind their behavior. In some extreme cases, workers who feared that they would be deprived of adequate compensation or severance engaged in actions such as taking managers hostage.

Provincial and local governments were complicit in some cases of forced labor of university students as “interns” at facilities managed by the Taiwanese electronics giant Foxconn. Local governments, in order to encourage Foxconn to establish operations in their cities, promised to help recruit workers for Foxconn’s labor-intensive operations. In September the media reported that students in Shandong and Jiangsu provinces complained that their universities made it mandatory that they serve 45-day internships on assembly lines in Foxconn factories to meet Foxconn’s production demands.

There continued to be reports of workers throughout the country engaging in strikes, work stoppages, and other protest actions. Although the government restricted the release of figures for the number of strikes and protests each year, the frequency of “spontaneous” strikes remained high, especially in Shenzhen and other areas with developed labor markets and large pools of sophisticated, rights-conscious workers. Local government responses to strikes varied, with some jurisdictions showing tolerance for strikes while others continued to treat worker protests as illegal demonstrations.

Another explanation for social resentments is corruption. Wide social grievances are caused by government officials’ acts of appropriating public property for private use and trading power for money. China is characterized by the government’s being unreasonable and upholding no justice. That’s how being unreasonable is transformed into social resentments. Since the government has formed the habit of telling lies, even when it suddenly tells the truth, the common people will not believe it.