China’s social compact may be breaking down:
Exports constitute nearly 40 percent of China’s GDP–far too high a figure. (By comparison, in the U.S., exports account for about 10 percent of GDP most years.) And the global financial slowdown is already taking a terrible toll. Some 10,000 factories in southern China’s Pearl River Delta area had closed by the summer of 2008. Gordon Chang, a leading China analyst, estimates that 20,000 more will shutter by the end of this year. In the third quarter of 2008, Beijing also reported its fifth consecutive quarterly drop in growth, and several private research firms expect a sharper slowdown next year. Additionally, unemployment is skyrocketing; in Wenzhou, one of the main exporting cities, about 20 percent of workers have lost their jobs.
It’s a dangerous game Beijing has been playing — trading constant growth for political stability (ie, continued authoritarian rule). For starters, growth by definition isn’t stable. And then there’s that pesky global downturn.
So I guess the question is: Is Beijing the next United States, or the next Brazil? Do they make the leap or just miss it, again and again?