The Urumqui effect

This is a surprisingly expansive and relatively unbiased article on the current situation in Urumqui,coming from the stables of WSJ.

In some ways,its an eye opener into the fiscal failings and deeply entrenched fault lines within the Chinese society and a stark reminder of the fact that this could well be 'the summer of discontent' for our northern neighbour as it might just find itself embroiled in a crisis of legitimacy in frontier areas that would need more than just 'wishing away' or party high handedness.

The rioting by Uighurs in Xinjiang's capital Urumqi in early July has put the spotlight back on China's handling of its ethnic minority regions. Coming just over a year after a similar outburst in Lhasa, the incident shows that hardline policies designed to suppress dissent have fostered bitter resentment. However, it would be a mistake to interpret this as a sign that China's control over Tibet and Xinjiang are unraveling. Rather the incidents should be put into a broader context of rising tensions within Chinese society.

Certainly Tibet and Xinjiang pose their own unique challenges. The seeds of the current unrest were planted in the mid-1990s, when government strategy toward the restive regions shifted to a more hardline approach. That has shut off avenues for the expression of discontent, bottling up tensions until they explode.

Despite the obvious costs of this policy, Beijing apparently regards them as worth paying to maintain a tight grip on its sensitive border areas, which are regarded as vital national interests. From its perspective, the policies may even be regarded as a success because the migration of Han Chinese into the sparsely populated regions enhances government control over the longer term, regardless of the friction it may create.

However, seen in the context of the wider Chinese society, the upsurge in unrest raises some worrying questions for Beijing. Despite the strictest possible control, the spread of information and rights consciousness has encouraged Uighurs and Tibetans to take to the streets in spontaneous demonstrations, and violent repression has stoked further unrest. This mirrors events taking place elsewhere in China, where potent fault lines within society are bursting into the open, despite the government's best efforts to foster a "harmonious society."

This suggests that China may be entering a period similar to that in the late 1980s, when demonstrations began to break out over a variety of issues. As during that period, the Chinese economy is under stress, with rising expectations running up against the reality of limited opportunities. Add in anger about corruption and abuse of power by local officials and the stage is set for what are euphemistically known as "mass incidents." While the government may be able to manage localized riots, there is a danger of a repeat of 1989, should an event provide the impetus for the formation of a wider national protest movement.

Widespread use of the Internet and mobile phones accelerates the spread of unrest beyond the capacity of the authorities to respond. The proximate cause of the rioting in Urumqi on July 5 happened thousands of miles away in Guangdong province. At a toy factory in Shaoguan, Han Chinese attacked young Uighur workers after rumors spread that they had raped several women. The state media reported that two Uighurs were killed, but graphic pictures and rumors of a higher death toll spread quickly over the Internet to Xinjiang. Complaining that the authorities were not doing enough to protect their compatriots, Uighurs took to the streets of Urumqi in an initially peaceful protest. Although the details are murky and the truth may never be known, the incident turned violent quickly after confrontations with the police.

This contagion effect must give Chinese leaders pause because it presages an era in which national stability is held hostage to the mistakes made by local leaders. When information flows were easier to control, violence in one area had little impact on the rest of the country. Today, by contrast, the Xinjiang violence dominates the consciousness of the whole Chinese population.

In part that's because propaganda authorities are under pressure to be proactive about reporting incidents in order to pre-empt the spread of rumors. Even then, as we saw recently, this coverage itself may not be accurate or effective in reassuring the population. And in any case, the net effect may be to undermine confidence in the government's ability to maintain law and order. It also tends to inflame Han nationalism, which, as with anti-U.S. and anti-Japanese protests in the past, can quickly spin out of control.

Paradoxically, the government's strict control over the official media combined with underground channels for information of dubious origins can prove to be a combustible mixture. Because Chinese netizens do not trust the media, they are more inclined to believe reports passed along the electronic grapevine. In this case, the spread of rumors quickly polarized both Uighur and Han communities.

Moreover, even though the state has extensive mechanisms to censor online communications, it has never been able to develop the "surge capacity" to stop the flow of information during a crisis. This also tends to make the system more unstable, as people discontented over other issues latch on to the issue of the moment.

Economic considerations are also coming into play -- it is significant that the initial rape rumors were spread by a Han Chinese angry that he lost his job in the factory where the Uighurs were working. While the macroeconomic statistics suggest China has been relatively insulated from the global financial crisis by massive government spending and new loans from the state-owned banks, on the ground the picture is more mixed. Privately owned export-oriented factories have closed, the fresh credit has tended to go into speculative investments, and infrastructure spending takes time to ramp up. The net effect may be to actually exacerbate tensions, as the poor struggle to find jobs while the rich and politically well-connected have access to government contracts and easy credit.

Several recent incidents suggest that society is becoming more volatile. Most dramatically, rioters fought a pitched battle with police in Shishou, Hubei, province, in late June after the suspicious death of the chef in a hotel with connections to the mayor. As is often the case in these incidents, the extent of the violence can be attributed largely to mishandling of the initial protest by local officials.

But it is not hard to conceive of circumstances that could lead to a wider protest movement. For instance, the scandal over melamine-contaminated milk powder last year was handled relatively well by the central government, with punishments handed down to those responsible and compensation paid to the victims. But were such an incident to implicate the family of top leaders, or the government fail to resolve it expeditiously, the same mechanism that spread protests from Guangdong to Xinjiang could come into play.

As the government increases its involvement in the economy through stimulus measures, there is an increased risk that corruption will again become a source of public anger. This would parallel to some extent the late 1980s, when a dual pricing system allowed Party officials in state enterprises to profit by buying commodities at state prices and then selling them on the open market. Today the mechanisms are different, such as the "land grabs" in which officials take plots from farmers and urban residents with minimal compensation and sell them on to real estate developers.

Another parallel to the 1980s is the increasing activism of intellectuals after decades of being silenced and coopted by the Party. Over the last five years, a loose grouping of legal professionals and academics haved tried to protect the rights of ordinary citizen against abuses of power by Party officials, a movement known as "Weiquan."

The pressure for political change today differs from the 1980s, however, in its emphasis on bottom-up activism, using a combination of the courts, media and other channels to put pressure on local officialdom. The late Party Secretary General Zhao Ziyang's recently published memoir highlights how the liberal wing of the Party that once pushed for political reform was eliminated after 1989. After that, he noted, the Party elite became increasingly enmeshed in the business world, creating vested interests that seek to preserve the Party's monopoly on power.

How this shift will affect social stability remains to be seen. On the one hand, the leadership split within the Party in 1989 was one of the key contributing factors to the protest movement gaining momentum and the ensuing crackdown. Today the Party elite is relatively united at least on policy issues, and the main intra-Party conflict is between the center and the regions, as local officials seek to cover up their misdeeds at the risk of spreading instability.

In other ways, the current situation could prove more volatile. As the Xinjiang experience shows, when dissatisfaction reaches the point where people no longer feel they have much to lose, even a massive security force cannot deter violence. Tensions may be highest in the minority areas, but the feeling of marginalization and victimization by Party officials is widespread.