The Economic Causes and Consequences of Social Instability in China

Social instability is a concept that economists rarely analyse, and yet it can lurk behind much economic policy-making.  China’s leadership has often publicly expressed its concerns to avoid ‘social instability’.  It is viewed as a threat both to the political order and to the continued rapid growth of the economy.  This threat to growth in turn endangers the maintenance of social stability.  This paper examines the likely economic determinants of social instability, using both surveys and other evidence.  After explaining the determinants of China’s rapid growth, the paper goes on to examine the likely mechanisms by which social instability can affect the growth rate.  There is a case for more research on the role of social instability in the economic development process.