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In recent decades, China has witnessed a remarkable economic transformation, becoming a global powerhouse. Central to this metamorphosis is a social phenomenon I term "The Great Barter" wherein a population, whether through choice or compulsion, exchanges substantial civil liberties for economic progress. This trade-off is particularly prevalent in impoverished nations, where economic necessity drives individuals to prioritise monetary gains, especially for essential needs, over freedoms.
Illustration by Geopolitics Next
For those less privileged, the assurance of basic necessities such as consistent meals often takes precedence over civil liberties like the freedom to critique government actions. This prioritisation reflects a pragmatic approach to survival and prosperity in contexts where basic life needs are not guaranteed. But it has widespread consequences in the long run.
This essay is about those consequences.
HISTORICAL CONTEXT AND ECONOMIC ASPIRATIONS
In the 1990s, China experienced a significant demographic shift as economic reforms spurred a demand for inexpensive rural labor in its burgeoning urban manufacturing sectors, predominantly in coastal regions. This era saw tens of millions of rural residents moving to urban areas, attracted by the prospect of higher and more consistent incomes compared to subsistence farming.
This migration was pivotal in propelling China's remarkable economic expansion, transforming the nation into the "world's factory" and a global leader in export manufacturing due to its vast supply of low-cost labor.
Despite the economic opportunities, the urban jobs available to these migrants were typically low-skilled and poorly paid, with challenging working conditions. Rural migrants earned on average 30% less than urban workers with comparable skills, exacerbated by systemic inequalities like the hukou household registration system, which limited their access to social services and better job opportunities in cities.
The influx of rural workers not only enhanced China's competitive edge on the global stage but also supported the Chinese Communist Party’s (CCP) domestic legitimacy.
However, this economic strategy required a trade-off, suppressing personal freedoms to prioritise economic growth. Over time, the hukou restrictions began to loosen, yet significant barriers remained, influencing migration trends and family dynamics. Looking forward, China faces the challenge of adapting its urban policies to better integrate this vital labor force, ensuring continued economic dynamism and reducing systemic disparities.
Illustration by Geopolitics Next
SHIFTS IN GENERAL EXPECTATIONS
The children of the first-generation factory workers in China represent a new societal segment, one born into relatively better economic conditions and afforded opportunities that were beyond the reach of their parents.
With access to improved education and exposure to global cultures through the internet, these younger Chinese have developed aspirations that stretch far beyond the factory floors that employed their parents. They seek careers in technology, services, and creative industries, aiming for roles that are not only financially rewarding but also intellectually and personally fulfilling.
However, the rapid shift in generational expectations confronts a harsh economic reality. The Chinese economy, while still growing, is no longer producing high-paying jobs at the rate required to keep up with the aspirations of this well-educated workforce.
Sectors like technology and finance are highly competitive and can only absorb a fraction of the graduates each year. This mismatch between expectations and available opportunities is leading to increasing levels of unemployment and underemployment among young adults, a scenario that fuels discontent and raises serious questions about the social contract in place. The implications of these unmet aspirations are profound.
Disillusionment can erode the social stability that China has managed to maintain for decades. As more young people feel that their ambitions are stifled by limited opportunities, the potential for social unrest grows, posing a significant challenge to the CCP's mandate and the promise of continued economic prosperity exchanged for restricted freedoms.
PUBLIC SATISFACTION AND ITS NUANCES
Public opinion surveys often tout high levels of satisfaction among Chinese citizens regarding the direction of their government. For instance, some reports claim that as many as 90% of the population approve of the government's policies. However, these figures require a nuanced interpretation, as they may not fully capture the undercurrents of dissatisfaction that simmer below the surface.
This apparent approval can often reflect a superficial acceptance, influenced by the limited availability of alternative viewpoints due to strict state control over media and public discourse.
Deeper probing reveals a more complex picture marked by growing economic discontent, particularly among the younger generation. Recent studies and widespread protests indicate that many are increasingly disillusioned with the economic slowdown, rising unemployment, and a stagnating real estate market—sectors that previously drove personal and national prosperity.
The economic pressures exacerbated by the pandemic and the government's zero-COVID policies have only deepened this discontent, sparking significant protests like those in November 2022, which, while initially triggered by public health measures, quickly encompassed broader economic and political grievances.
These manifestations of dissatisfaction suggest a gap between the government's portrayal of national sentiment and the actual public mood, hinting at potential challenges ahead in managing both the expectations and the well-being of its citizens.
As economic challenges persist, the strain on this social contract—where economic gains were once exchanged for limited freedoms—may lead to increasing demands for more than just economic answers.
ECONOMIC SLOWDOWN AND SOCIETAL IMPLICATIONS
China's economic engine, once known for its double-digit growth rates, has begun to slow, with profound implications for societal stability. This slowdown is marked by several critical issues: high youth unemployment, stagnating wages, and a deepening crisis in the real estate sector, which previously played a crucial role in driving economic activity and personal wealth accumulation.
Youth unemployment is particularly concerning, as young Chinese graduates find themselves facing a job market that cannot accommodate their numbers or expectations.
This mismatch is a direct result of an educational system that has successfully expanded access to higher education but finds itself at odds with an economy unable to generate suitable employment opportunities at the same scale. Stagnating wages compound this issue, as they diminish the quality of life and future prospects for a generation that was promised more.
The real estate sector, once a reliable growth stimulant, has become a source of instability. The bursting of speculative real estate bubbles has left many middle-class families with devalued assets and loans on properties that are losing value, leading to financial strain and loss of confidence in future economic governance.
These economic pressures are creating fertile ground for public dissent, challenging the CCP's ability to govern effectively.
As economic grievances mount, the potential for social unrest grows, placing additional pressure on a government that has historically traded civil liberties for economic development. This could lead to increased demands for reform, not just economically but also in terms of governance and personal freedoms, posing significant challenges to the CCP’s long-standing social contract with its citizens.
THE ROLE OF STATE CONTROL AND CIVIL LIBERTIES
The Chinese government has long relied on a combination of force and surveillance to maintain control over public dissent, reflecting a deep-seated approach to governance that prioritises state stability over individual freedoms. This strategy involves extensive monitoring of the population through sophisticated surveillance technologies, including facial recognition and internet censorship.
Additionally, the state does not hesitate to deploy force, as evidenced by its response to various protests, most notably the 1989 Tiananmen Square massacre and more recent demonstrations against stringent COVID-19 policies.
While effective in the short term, the sustainability of such repressive measures is questionable as societal pressures accumulate. The ongoing suppression of public dissatisfaction can only serve as a temporary solution.
As economic and social grievances deepen, particularly among the younger, more digitally connected, and globally aware generation, the potential for internal conflict escalates. These individuals are increasingly unwilling to trade their civil liberties for economic benefits that are no longer as substantial or guaranteed as before.
The long-term suppression of dissent risks not only internal unrest but also international criticism and potential economic sanctions, which could further strain China's global relationships and economic stability. As such, the Chinese government may need to consider more sustainable governance models that incorporate greater respect for civil liberties if it wishes to maintain social stability and economic viability in the face of growing internal and external challenges.
CONCLUSION
As China steadfastly prioritises rapid economic expansion over the preservation of civil liberties, it teeters on the brink of substantial risks that threaten to destabilise its future. The societal pact—exchanging freedoms for economic growth—is increasingly under duress, stressed by a decelerating economy, escalating unemployment rates, and a burgeoning sense of disillusionment among the youth. These elements could potentially be poised to ignite widespread public dissent in the next few decades, challenging the governance model of the CCP and potentially ushering in an era of acute confrontation between the state and its citizens.
The potential resolutions loom at a crossroads: either through strategic policy shifts advocating for greater political openness and economic reform, or through mounting societal pressure that demands such transformative changes.
The trajectory China opts for will profoundly influence not only its domestic landscape but also the global stage. As a pivotal economic powerhouse, any significant internal instability could send shockwaves through global markets and geopolitical arenas, shaping international relations and economic strategies worldwide.
In the shadow of these looming challenges, China's internal dynamics serve as a stark reminder of the precarious balance between authoritative control and individual freedoms. This delicate equilibrium highlights the critical dance between maintaining stability and nurturing sustainable growth within a globally interconnected framework.
Should China falter in addressing these issues effectively, refusing to adapt or mitigate the growing concerns of its populace, the resulting confrontation could be fraught with peril, marking a potentially volatile phase in its history.
BY GEOPOLITICS NEXT
CURATED BY TEAM GEOSTRATA
Substatial policy shifts advocating for greater political openness and economic reform are crucial to tame the dragon
Very well analysed! A must read
A must read for China observers.
The state must not compromise on society for economy
Paramount to understand the history and working of the Dragon