|Popular anger at supposedly corrupt local officials is growing. The problem with this is that central government officials are drafting unfunded wish lists. The public hears about these wish lists and thinks that local officials are corrupt for collecting taxes to fund them. Eventually, things come to a head, and central government officials start punishing local officials for not delivering on those wish lists without imposing new taxes. And local officials, realizing that they're between a rock and a hard place, decide to foment insurrections. Thus begins the end of yet another of China's dynasties.
LAST week's announcement by Pacific Brands that 1850 Australians were to lose their jobs to China spread gloom among workers at large-scale local manufacturing industries. But in reality Chinese migrant workers are faring much worse. More than the equivalent of the whole population of Australia, 20-30 million people, have already lost their jobs and thus also their housing in the factory towns.
They travelled from their rural homes where they had long been underemployed, barely scraping a living, to stay for extended periods in dormitories in factories in coastal cities, making goods mostly bought in the US, Britain and elsewhere in the West.
Credit and confidence have collapsed in the West, and so has the demand for the clothes, the toys, the plasma television screens they make.
And despite growing rhetoric from Beijing about broadening the base of China's economy by boosting consumer demand, the policies that would have achieved this were not put in place before the country's main export markets collapsed.
The Communist Party rules by consensus as well as control, and the leadership has found it difficult to balance the country's conflicting interests -- including between the developed coast, with the jobs, and the less developed heartland, with the struggling farmers -- while introducing a fresh wave ofreforms.
But there are signs that at last reforms to modernise the economy are under way. It is easier for party leaders to explain this on the grounds that without change now, the Government will be forced to confront scores of thousands more "mass incidents" as it calls the demonstrations and protests already stirring in rural China.
He Guangping, the deputy head of the public security department in Guangdong, the southern province that makes a third of China's exports, says: "Faced with the complicated changes in public security in society, especially given the impact of the international financial crisis, we expect the public security situation to be grim.
"All kinds of illegal and criminal activities will continue to increase ... The task of safeguarding social stability, law and order overall, is arduous."
China is big on anniversaries, and it has only just finished celebrating 30 years since Deng Xiaoping opened the door to business, beginning with the farmers.
Since then, China's remarkable development -- which has seen hundreds of millions of people emerge from poverty -- has been driven substantially by its becoming the world's factory.
About 60 per cent of China's exports are made by foreign-owned or foreign-invested companies, chiefly from Taiwan and Hong Kong, and some simply locked the doors after giving their workers their tickets home for their annual leave at Chinese New Year a month ago.
Most had made profits for years, but were confronting ever-narrowing margins as costs rose and the big buyers, such as Wal-Mart, kept screwing prices down.
And they lacked access to financial support. China's banks, all state-owned, rarely lend to the private sector and especially not to small or medium businesses.
The rural communities that have depended on the money sent home by the women and men working away -- about 200 million in all, 15 per cent of the population -- are deprived of the income on which they had grown to depend. Many now also have to sustain an influx of adults who have not lived there for years.
These adult children are becoming known as the ken lao zu, the generation who bite the old, relying on the savings or farm earnings of their aged parents.
The next anniversaries that China has to negotiate are more awkward ones: March 10, the 50th anniversary of the Dalai Lama's last stand and retreat into exile from Tibet, then on June 4 it will be 20 years since the Tiananmen Square massacre.
The Government is especially anxious the downturn does not provoke better educated people to join up the dots and create a protest movement that can gain national traction, as happened in 1989 over inflation and corruption.
Thus it is suspending the requirement for China's cities to insist that new graduates already possess a houkou -- a permanent residency permit for the city -- before they can be hired. About nine million students graduate annually, and this means they can travel widely to find work and may be less likely to stay at home, jobl