In China, a fear of social instability has long constrained government efforts toward economic and structural reform. After three decades of nearly unrestrained and uncoordinated growth, China's leaders are now facing a moment in which change is no longer simply desirable; it is a necessity. The global economic system is rebalancing, economic power is becoming more diffuse, and China's export- and investment-driven economy has, as its regional predecessors, largely run its course.

Beijing talks of a shift to an internal consumption-based economy — one less susceptible to the vagaries of international trade and overall more self-sustaining. But that is not a simple change, particularly in a country where the government is dictating that the transition take place over a very short span of time. Decades of redundancies and inefficiencies in the economy, significant overcapacity in some sectors and undercapacity in others, and a pervasive culture of local self-interest and corruption further complicate the desired transition.

Any change will of necessity lead to higher unemployment, to pockets of significant economic downturns, to changes in the overall balance of power among the Party elite. Moreover, the Party is no longer able to rely on its tool of social cohesiveness — the promise that all will get rich, even if some get rich sooner — and is instead emphasizing the economic "new normal" of lower and slower growth rates. Constraints on internal migration, expanding gaps between the interests of central and local government officials, and a middle class that is both comfortably established and focusing its attention on the next layer of social rights, particularly environmental issues, leave China prone to the very social instability that has thus far curtailed significant economic reforms.

Social Stability and Centralized Power

By many accounts, up to 500 protests occur in China each day, and anecdotal reports suggest the number is rising. Labor disputes, complaints against the actions of local law enforcement, accusations of corruption and mistreatment at the hands of local government officials, perennial issues of ethnic and religious rights, and environmental and "NIMBY" (Not In My Back Yard) issues drive many of the protests, which range in size from a handful to well over 10,000 participants. Managing public unrest presents a further challenge where local and central interests diverge. Often, economic reform dictates from Beijing are only tepidly enforced at the local level, or contravened entirely, because they could trigger local employment crises. At other times, local officials may prove too heavy-handed for Beijing's overall interests as the central government tries to reform the image of the Communist Party. But social unrest, despite its rise in China, has not grown beyond the state's ability to manage it.

The consolidation of power under President and Party General Secretary Xi Jinping is in part a move to overcome the legacy of institutional inertia left by the consensus-based politics that Deng Xiaoping established to mitigate the vagaries of a Mao Zedong-type leadership. Consensus eliminated the ability of even the paramount leader, Deng, to take a route that led China too far off the rails. Consensus rule worked well in times of economic growth and prosperity, but it has not worked so well when tough decisions need to be made and rapid actions need to be taken.

The overall tendency of the consensus-based leadership was to avoid social instability — to ease off on any reforms or initiatives that were triggering a social backlash. The "one step forward, two steps back" sort of economic reform of the late 1990s and early 2000s was a case in point. China's leaders have long known of the need to significantly change the country's internal economic structures but have been reticent to do so, kicking the can of reform down the road or producing minimally effective reforms that pleased no one and created unforeseen socio-economic consequences. Although some leaders' personal economic self-interests played some role in this, so did a concern that reforms would lead to unemployment and social dislocation — something best avoided.

The idea of a centralized leadership is that the tough decisions can not only be made but also enforced. Xi's widespread anti-corruption campaign is part of this equation, because it breaks apart the networks of relationships within the Party that officials counted on for security and promotion. This is supposed to reverse local governments' resistance to central government mandates, with Beijing effectively accepting greater social dislocation in the short term and confident it can largely manage any instability. Internal media controls and the promotion of a stronger sense of nationalism are both tools of management, but they serve less to quell social instability than to keep it constrained.

Beijing's concern is not social unrest itself; that is a common phenomenon, and in a country where there is no other legal outlet to express frustration or disagreement, a certain number of protests can serve as a relief valve. The bigger concern is social instability that crosses regional and socio-economic barriers. Hundreds of disconnected protests can each be dealt with as local incidents, and although a few may strain local security forces, they are for the most part manageable. But protest movements with a central coordination, spreading across regions and preaching about goals that do not support the sacredness of the Party, become a more acute threat to the Party.

China has a history of semi-religious social movements, militant groups and rebellions that spring up during times of economic and political strife. From the White Lotus Society and the Taiping to the Boxers and the Falun Gong, these movements are seen as a challenge not solely because of violence (not all were violent in the beginning, and Falun Gong was never an overtly violent movement) but rather because of their ability to become competing centers of power against the centrality of the Communist Party.

The 1774 White Lotus Rebellion drew its support from barge workers and coolies generally dissatisfied with the status quo. The Taiping Rebellion, which lasted from 1853-1864, drew on multiple classes of disaffected society, all ultimately united in their interest to remove the then-ruling Manchus. The Boxer Rebellion in 1900 sprung up from among peasants and workers hurt by the worsening economic conditions in China, and while the government at first tried to co-opt the rebels in its own struggle against Western imperialism, it ultimately triggered the sacking of Beijing and accelerated the demise of Imperial China. Falun Gong perhaps scared Beijing even more for its ability to attract some 10,000 individuals to stand quietly around the government offices in Beijing. Even more troubling was the fact that membership included anyone from migrant laborers to prominent Party members.

Beijing has been known to crack down on anything — from religious organizations to direct marketing schemes — that could present a center of power other than the Party. The fear is that these organizations, even if not rebellious per se, can create cohesive entities that reject or even actively counter the dictates of the Party. In a one-party system, this cannot be tolerated. More recently, China's attention has shifted to another potential source of unifying opposition: environmentalism. China's emerging middle class is taking on some of the same issues and concerns as those in the developed world — questions about quality of life, air and water safety, and rampant factory pollution. At the same time, rural Chinese are more comfortable challenging local governments that are taking land for new factory construction, particularly targeting chemical plants and other potentially highly polluting facilities.