"China's Biggest Risks Are Economic"

No. In fact, China's most severe risks are ecological -- particularly its environmental problems and its vulnerability to communicable disease. Of course, this is not to say that China has no economic problems. No country is immune from the normal business cycle, and China today is subject to both inflationary and recessionary risks. But Beijing is developing the fiscal and monetary tools to regulate the economy so as to prevent these problems from becoming catastrophic once they emerge.

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In contrast, China's ecological and health risks are far more serious than people realize. Air pollution in China is affecting the quality of life in cities like Beijing, Hong Kong, and Shanghai, among others. The risk of water shortages, both in agricultural areas and major cities, is high and growing; only 1 percent of the surface water available to Shanghai is safe to drink. In one harbinger of things to come, an explosion at a chemical plant in northeast China in November 2005 sent a benzene slick cascading down the Songhua River. Millions of people in the large, industrial city of Harbin were without water for a week. The probability of more acute environmental crises resulting from chemical spills or toxic emissions is high. The Chinese government is already warning that the country’s emission of carbon dioxide and greenhouse gases will significantly damage China’s agricultural production.

China is also experiencing epidemics of chronic disease. Reported cases of HIV increased by 30 percent to roughly 650,000 in 2006, and the United Nations projects that 10 million Chinese will be infected by 2010. Hepatitis infects 10 percent of the country’s population. The probability of an outbreak of an acute communicable disease, such as the avian flu, remains high. The main issue is how virulent the virus will be, and whether its spread can be contained. The risk is exacerbated by the decay of the rural public health system due to lack of funding and by the reluctance of local officials to report new occurrences of the disease, making it more likely that an outbreak will become a deadly epidemic.

"A Second Tiananmen Crisis Is Inevitable"

Hardly. The Tiananmen Square crisis of 1989 involved mass protests in scores of cities across China -- and the demonstrations in Beijing were so large that the government was able to suppress them only through the use of brutal military force. Though not inconceivable, another dramatic uprising on that scale is unlikely.

It is true, however, that China has many problems that are producing widespread popular discontent. These include environmental problems; gaps in the country's social safety net, particularly with regard to health insurance and old-age pensions; controversies over land and water rights; and chronic corruption among officials. These grievances have caused a sharp increase in grassroots protests. The Chinese government itself reported some 80,000 such incidents in 2005, some of which were quite large and even violent. In the most notorious uprising, in late 2005, riot police fired at protesting farmers in a rural Guangdong Province village. Witnesses claim as many as 20 villagers were killed.

But Chinese leaders are adopting policies to address the causes of rural grievance, such as increasing spending on rural projects, abolishing onerous agricultural taxes, and cracking down on local officials who squeeze villagers. When protests do occur, they arrest the leaders but often try to remedy the particular issues that caused the unrest. Six months after the fatal confrontation in Guangdong, a similar protest nearby ended with official promises to review the terms of the land confiscation that had provoked it. Above all, by controlling the media and suppressing independent political organization, Beijing is trying to ensure that protests remain localized. Moreover, in many quarters, particularly China's growing urban middle class, political support for the government appears to be quite high.

The real concern is whether bigger issues could foil these efforts. The emergence of serious and widespread economic problems (especially inflation and unemployment) or the government being blamed for a major domestic or international crisis (such as an environmental catastrophe or an incident during the upcoming 2008 Olympics) could lead to nationwide discontent. It would be particularly dangerous if the dissatisfaction were so widespread that it overwhelmed the party's control over the media and the Internet, or produced a divided leadership unable to respond effectively. In such a circumstance, there could be large-scale protests in several major cities that might be difficult to control, as was the case in 1989.

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