Can China’s development-based social contract withstand unemployment pressures?

“Development is the hard truth,” Deng said, and all debates about whether reform policies were capitalist or socialist should stop. Instead, support should go to whatever reforms benefited productivity, the overall strength of the country and living standards of the people.

Generations of Chinese leaders have stayed true to that principle. President Xi Jinping, who in recent years has made poverty relief and the pursuit of “common prosperity” his signature policies, acknowledged as much in his first speech as party leader in 2012.

“Our people love life and yearn for better education, stable jobs, more satisfactory income, greater social security, improved medical and healthcare, more comfortable living conditions, and a better environment,” he said.

The focus on development is built into the official rhetoric, with Chinese authorities applying its lens to the country’s human rights record with distinctly different parameters from those used by Western governments.

Speaking at an international human rights event in December, Foreign Minister Wang Yi said China had always taken development as the foundation for human rights, and ensured more effectively the rights to subsistence and development for its people.

He said China had solved absolute poverty and built the world’s largest education, social benefit and medical systems.

Dali Yang, a political scientist at the University of Chicago, said people in China “always believed” in an implicit social contract – “that when there’s economic growth, when individual wealth and living standards are on the rise, there’s high support for the government”.

This implicit contract can also mean heightened risks to stability in times of unemployment, which can affect the public’s trust and support in the government, Yang said.

“In the 1990s, the crime rate was quite high in many cities, including the capital Beijing and Guangzhou … the public worried about robberies and didn’t dare travel outside the cities,” he noted.

“From this angle, when there’s unemployment, there are bound to be concerns about crime.”

The problem has even come to the attention of top adviser Liu Yuanchun, president of the Shanghai University of Finance and Economics who has previously advised the Politburo, China’s highest policymaking body.

In a report published last month by the China Macroeconomy Forum, Liu wrote that the issue of youth unemployment is likely to continue for the next decade and worsen in the short term.

“If not properly handled, it might cause other social issues or even trigger political problems,” he said.

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The reasons behind China’s high youth unemployment rate

The reasons behind China’s high youth unemployment rate

While the modern party’s legitimacy is based on a growing and diverse range of sources, “performance-based legitimacy” remains a central pillar of stability, as it has for many decades, said Eli Friedman from Cornell University’s School of Industrial and Labour Relations.

“There are other sources of legitimacy the party draws on, most importantly patriotic pride in China’s increased power in the world,” Friedman said.

“But most analysts agree that people have generally been supportive of the state due to plentiful jobs, improving transport, and opportunities for upward socio-economic mobility.”

According to Friedman, the Chinese Communist Party needs to figure out ways to try and at least stabilise the livelihoods of its citizenry. He proposes relieving public anxiety by focusing on initiatives like publicly funded healthcare and pensions.

“The single most important thing they could do would be to make large investments in social infrastructure to match the investments they have already made in physical infrastructure,” he said.

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