China's Not Quite Perfect Storm

The government's response has been swift and very public, with Premier Wen Jiabao holding an emergency conference of responsible government officials on Sunday that was widely covered in Chinese media. The main point of the conference was top ensure electricity supplies aren't affected by the soaring demand caused by the cold weather. More than three quarters of China's electricity is generated by coal-fired plants and unfortunately for the government the country is currently experiencing a nasty coal shortage. Not only does this not help in its battle against inflation, which has been a growing source of popular discontent. Electricity price rises are capped by the government, but coal prices are not, which means that utilities are screaming to be allowed to pass the rises along to the consumers.

The government has to tread very carefully indeed for the next couple of weeks. China remains a very volatile place, as Nicholas Bequelin of New York Based Human Rights Watch points out, with many of the hundreds of daily outbreaks of "public disorder" arising from seemingly trivial causes. A rise in bus fares for example, led to a bloody riot in the province of Hunan that took hundreds of troops to put down and left one dead and scores injured. A friend was at Beijing airport recently and was astonished to witness a fistfight breaking out at a ticket counter among airline staff and passengers frustrated by a long delay on a scheduled Hong Kong flight.

With so many people trying to get home in the next few weeks, and the weather predicted to remain a major impediment to smooth travel, it will be a testing time for the authorities. This kind of situation is bad enough for any government, but for one that draws its sole legitimacy from its administrative competence and ability to keep the economic boom going, the threat of widespread frustrations and delays that will inevitably be blamed at least in part on Beijing is a particularly alarming prospect. The masses aren't going to rise up and throw the bums out because they can't get home for new year or can't get electricity for a few days. But with a U.S. recession looming, it's a timely reminder that if these sort of problems last for longer than a few days, and if the economic good times happen to have come to and end, things could get very nasty indeed in a hurry.