Developing Economies

Why China Should Worry About Egypt

Tiananmen Square, 1989 (left); Tahrir Square, 2011 (right) i

Tiananmen Square, 1989 (left); Tahrir Square, 2011 (right) Ben Curtis, Jeff Widener/AP hide caption

itoggle caption Ben Curtis, Jeff Widener/AP
Tiananmen Square, 1989 (left); Tahrir Square, 2011 (right)

Tiananmen Square, 1989 (left); Tahrir Square, 2011 (right)

Ben Curtis, Jeff Widener/AP

Economic growth isn't enough to prevent social unrest — particularly if the benefits of growth are distributed unevenly, and there are a lot of young people who feel dispossessed.

So the protests in Egypt should make China nervous, the Berkeley economist Barry Eichengreen argues in a post at Project Syndicate.

Eichengreen lays out the similarities between the countries.

Economic growth has been strong.

Annual growth since 1999 has averaged 5.1% in Egypt, and 4.6% in Tunisia – not Chinese-style growth rates, to be sure, but comparable nonetheless to emerging-market countries like Brazil and Indonesia, which are now widely viewed as economic successes. Rather, the problem is that the benefits of growth have failed to trickle down to disaffected youth.

University grads are unemployed or underemployed.

Egypt:

University graduates find few opportunities outside of banking and finance. Anyone who has traveled to the region will have had an experience with a highly literate, overeducated tour guide.

China:

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.

Unskilled workers are marginalized in the informal sector.

Egypt:

With modern manufacturing underdeveloped, many young workers with fewer skills and less education are consigned to the informal sector.

China:

... less-skilled and less-educated migrants from the countryside, who are consigned to second-class jobs in the cities. Not possessing urban residency permits, they lack even the limited job protections and benefits of workers who do. And, because they may be here today but gone tomorrow, they receive little in the way of meaningful on-the-job training.

Corruption is widespread.

Egypt:

Getting ahead depends on personal connections of the sort enjoyed by the sons of military officers and political officials, but few others.

China:

Personal connections, or guanxi, remain critical for getting ahead. Recent migrants from the countryside and graduates with degrees from second-tier universities sorely lack such connections. If they continue to see the children of high government officials doing better, their disaffection will grow.

The upshot.

The ability of disaffected youth – university-educated youth in particular – to use social media to organize themselves has been on powerful display recently in Tunisia, Egypt, and elsewhere. Last month, it was still possible for the Egyptian government to halt all Internet traffic and for the Chinese authorities to block the Chinese word for "Egypt" from its Twitter-like service Sina. But in social media, as in banking, the regulated tend to stay one step ahead of the regulators. Such shutdowns will be increasingly difficult to enforce.

If Chinese officials don't move faster to channel popular grievances and head off potential sources of disaffection, they could eventually be confronted with an uprising of their own – an uprising far broader and more determined than the student protest that they crushed in Tiananmen Square in 1989.

For more: We reported last week on the business interests of Egypt's military, and how those interests are likely to affect the country's future. Read the blog post, and listen to the podcast.

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