Should China Worry About Egypt?

Conflicting opinions abound about how relevant the ongoing in are for China. On Project Syndicate, Berkeley economist Barry Eichengreen writes that, from an economic perspective, there are many similarities between the current situations in both countries:

It may stretch credulity to think that a high-growth economy like China might soon be facing similar problems. But the warning signs are there. Given the lack of political freedoms, the Chinese government’s legitimacy rests on its ability to deliver improved living standards and increased economic opportunity to the masses. So far those masses have little to complain about. But that could change, and suddenly.

First, there is the growing problem of unemployment and underemployment among university graduates. Since 1999, when the Chinese government began a push to ramp up university education, the number of graduates has risen seven-fold, but the number of high-skilled, high-paying jobs has not kept pace.

Indeed, the country is rife with reports of desperate university graduates unable to find productive employment. Newspapers and blogs speak of the “ant tribe” of recent graduates living in cramped basements in the country’s big cities while futilely searching for work.

In part, these unfortunate outcomes reflect the inflexibility of China’s education system. Students spend their entire four years at university studying a single subject, be it accounting or computer science. As a result, they have few skills that can be applied elsewhere if the job they expect fails to materialize. There has also been a tendency to push students into fields like engineering, even though the Chinese economy is now beginning to shift from manufacturing to services.

Thus, China needs to move quickly on education reform. It needs to provide its university students with more flexible skills, more general training, and more encouragement to think critically and creatively.

In an op-ed, Ohio-based Chinese academic Xiaoxiong Yi, disagrees:

For a starter, these analyses largely missed a real reason behind the riots in Cairo. As Vincent Truglia, managing director of global economic research at Granite Springs Asset Management, points out, “The protest in Egypt is not simply a sudden desire for reform. Rather, the key problem is the price of food. There are two vexing problems for the Egyptian government: first, a rising population of about 80 million; and second, declining per capita domestic food production. This is not about politics; it is about food.”

What is perhaps more important is the domestic situation in China. As Christina Larson, contributing editor at Foreign Policy and Washington Monthly who reports widely from China, puts it, “by almost any quantifiable measure — per capita income; access to goods and services; educational attainment, etc. — Chinese people’s lives are, on the whole, getting better. There is plenty of cynicism, but even while griping, most people in China are striving to get ahead — and for now, a fair number of them are. Older Chinese are usually quick to point out that the relative calm of present-day China is far preferable to the tumultuous violence of past eras. Nor do younger strivers necessarily want to rock the boat. As long as people’s lives are getting better, most can look the other way about goings-on up top.”

What allows China to thrive thus far is an experiment of hyper-charged economic development without much political change. While China’s extraordinary economic success to date is impossible to refute, however, Egypt has largely missed out — the country today ranks 137 in the world in per-capita income, with a population in the top 20. The lesson of Mubarak government’s failure is really very simple, as the Wall Street Journal’s Zachary Karabell puts it “You can have economic reform, or you can have , but you cannot have neither.” President Mubarak, however, has managed to forestall both.

Nevertheless, the Chinese government is trying to limit the information about the situation in Egypt inside China. This week, in Guizhou, activists were given money by police for stopping distribution of pamphlet about recent events in Tunisia and Egypt:

Activists in Guizhou province tried to hand out information about the demonstrations over the weekend, but police told them this was an “unusual period” and gave them 3,000 yuan ($450) to stop, Chen Xi told AFP.

The police paid the money to compensate for losses incurred from the printing costs, and when the activists tried to distribute more information in Guiyang city on Monday, police again barred them from doing so, Chen said.

“We do this (hand out leaflets) all the time but the police believe it’s an unusual time right now — they don’t want to let Chinese people know about the situation in North Africa,” he said.

“Most of the time, they tolerate us, but this information they cannot tolerate.”

And the State Council Information Office and Ministry of Public Security issued a directive on reporting on Egypt:

For the disturbances in Egypt, media across the nation must use copy circulated from Xinhua. Websites are to strengthen [monitoring] of posts, forums, blogs, and particularly posts on microblogs. Our bureaus will forcibly shut down websites that are lax in monitoring.

February 9, 2011, 10:54 AM
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Categories: Economy, Politics