"Why Egypt Should Worry China"

Barry Eichengreen:

Why Egypt Should Worry China, by Barry Eichengreen, Commentary, Project Syndicate: A strictly economic interpretation of events in Tunisia and Egypt would be too simplistic... That said, there is no question that the upheavals in both countries – and elsewhere in the Arab world – largely reflect their governments’ failure to share the wealth.

The problem is not ... economic growth. ... Annual growth since 1999 has averaged 5.1% in Egypt, and 4.6% in Tunisia... Rather, the problem is that the benefits of growth have failed to trickle down to disaffected youth. ... Corruption is widespread. Getting ahead depends on personal connections...

China might soon be facing similar problems... the warning signs are there. ...

First, there is the growing problem of unemployment and underemployment among university graduates. ... Indeed, the country is rife with reports of desperate university graduates unable to find productive employment. ...

Moreover, there is the problem of less-skilled and less-educated migrants from the countryside, who are consigned to second-class jobs in the cities. ...

Finally, China needs to get serious about its corruption problem. 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 Chinese officials don’t move faster to ... 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.