an even more frightening scenario, page-21

In 1998, China's labour market was 728.3m, and it's unemployment rate 6.4% (ie: 47m).

By 2000, the labour market had increased to 743m and unemployment to 8.2% (61m).

By 2002, unemployment had increased (latest EIU estimates, 12/02) to 11.6%, and its labour force, to 769m. That's 86m unemployed.

The EIU forecast for 2003 (01/03) is for a workforce of 780m, a 13.1% unemployment rate, and 102m unemployed.

And that's only those who we know of.

Projected out to 2007, the EIU forecast is for a workforce of 821m, an 11.2% unemployment rate, and still 92m unemployed.

In its latest Country Forecast for China (12/02), the EIU stated the following concerns for growth, unemployment and China's SOEs:
•
In 2003, "the Sino-US relationship is likely to be smooth in the early part of the forecast period because both sides have more urgent concerns: the succession in China, Iraq in the US".
•
By 2005, "differences over issues such as human rights and trade will be voiced more loudly".
•
During the current 5-year planning period, to 2007, "the government will seek to rein in the 5-year-old deficit spending programme in view of the growing - but currently not alarming - fiscal imbalance".
•
According to the EIU China Country Forecast (12/02), "(t)he government will be extremely cautious about cutting public investment spending until it is confident that other areas of the economy - external demand, private investment & household consumption - are expanding strongly enough to ensure the 7% rate of GDP growth that officials consider necessary to preserve social stability".
•
During the same planning period, "(t)he government will rely more on the private sector to generate growth and provide jobs for workers laid off from state-owned enterprises (SOEs) and migrants from the countryside.
•
According to the EIU, it will not be possible for a swift restructuring of the SOE system to take place (Kennett et al), "as that would raise the risk of social unrest and hence threaten CCP rule".
•
Conversely, the EIU expects that "(r)eforms to the state-owned banking sector - burdened with bad debt extended to SOEs - are expected to proceed at a faster pace, but will not be completed by (2007)".
•
The EIU's forecast then concludes that "China's economy will continue to grow by 7-8% a year, as officially reported, during the forecast period. The underlying strength of the economy will, however, improve as private investment and household consumption become more important drivers of domestic demand growth, as the state sector is streamlined".

So, unemployment is up, the rural migration to the cities and more prosperous southern provinces continues unabated, the SOEs are virtually debt ridden and at risk of total collapse, taxation exists (but like in Russia, is full of loopholes, and evasion, as opposed to compliance), the State lacks a social welfare safety net, and the State is in need of keeping up a robust level of economic growth just to maintain the status quo, without seeing internal turmoil and the collapse of CCP control.

All in all, China is more dependent today on the West than it has ever been before.

Without that support, China is at risk of increasing internal dissent, internal collapse, and breakaway republics, just as occurred in respect of the former Soviet Union and the collapse of the Iron Curtain.

And, to make matters worse for China, it's only major allies in Asia can be found in North Korea, and in Pakistan.

Elsewhere, throughout Asia, China's enemies amount to:
1)
Japan (traditional, the Manchurian campaign, WW2, etc);
2)
Taiwan (family, the renegade province, a clash of political cultures between the former Nationalists of Chou En-Lai, and the hardened Communists of Mao Tse-Tung);
3)
Vietnam (historical, border rivalry, cultural clashes);
4)
Russia (otherwise, why the continuation of the heavily fortified northern, common border);
5)
the Philippines (historical, the disputed Spratleys, the South China Sea, etc);
6)
India (border war of the late 1960s, disputed border territory continuing today, heavily fortified border, and support of Pakistan);
7)
Indonesia (the CCP actually interferred in the internal affairs of Indonesia during the immediate post-war period when the Indonesian Communist Party was seeking to take control of the country); and
8)
South Korea (for obvious reasons).