Why Beijing Must Satisfy Workers

There's little doubt that China is one of the great economic success stories of the past decade. Despite well-founded criticism of China's official statistics, it is indisputable that living standards have improved dramatically for many Chinese. Exports have risen, and the technological capabilities of Chinese factories have grown as well. China was also one of the few Asian countries able to overcome the financial crisis of 1997.

But long-forecast tensions between the country's increasingly market-based economy and its autocratic political system are beginning to surface. Across much of China, workers are protesting--blocking roads, rallying outside factory gates, and besieging government offices. Their complaints range from shuttered factories to unpaid wages to insufficient unemployment benefits to corruption among top managers.

These protests represent a major challenge to China's government, but they also are a major opportunity to move the country forward to a more sustainable political and economic structure. The old combination of economic reform and top-down politics, successful for years, doesn't work so well now. Joining the World Trade Organization means that much of China's old industrial sector is facing foreign competition that's already forcing plant shutdowns and widespread layoffs.

Meanwhile, economists are anticipating that China will have trouble generating enough jobs to satisfy the expanding workforce, with an estimated seven million new workers being added annually. Without the safety valve of political participation, worker dissatisfaction is going to be aimed directly at the government, with potentially explosive results.

Beijing is aware of the dangers, and it is already encouraging grassroots political reform in some areas to reduce corruption. But that won't be enough if the divergence between worker expectations and reality continues to grow. More and more, it will be necessary to give ordinary Chinese a real voice in their government. Not easy. But such a transition, if the current and next Beijing regime can manage it, offers the best way to build a solid foundation for the next stage of China's economic miracle.

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