* Inflation, corruption and inequality are good reasons for politicians to lose sleep

Greater Wealth Isn't Enough

Oded Shenkar is the Ford Motor Company Chair in Global Business Management at the Fisher College of Business at Ohio State University. He is the author of “The Chinese Century” and "Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge."

The Chinese leadership is nervously keeping a close watch on the upheaval in the Middle East, and preparing its own response. The Internet police is working overtime, plain cloth policemen are everywhere, and uniformed police forces have been deployed in potential trouble spots. Not since the collapse of the Soviet Union have China’s Communist Party leaders been so worried about “foreign ideas” contaminating the country's “social harmony.”

Inflation, corruption and inequality are good reasons for the Chinese leaders to be anxious.

Economically, China is doing phenomenally well, having just been crowned the world’s second largest economy. Poverty is down and standard of living is way, way up. The country is also increasingly assertive on the world stage, which should feed into nationalist sentiments. It is difficult to see much similarity to Tunisia, Egypt, and Libya, whose economies have stagnated for decades. But look closely and you’ll see China has reasons to be anxious.

While the Middle East upheaval started in down-and-under economies, it has since spread to places likes Bahrain and Oman, whose citizens are doing well by almost any economic measure. This, of course, calls into question the Chinese strategy of relying on a full stomach to keep people at bay (not surprisingly, these countries quickly moved to offer higher wages and allowances).

One of the main triggers of the uprisings in the Arab world has been a run-up in food prices, something that is happening in China as well and may get out of control, in my opinion. Inflation is especially worrisome to the Communist Party, who surely remembers that it was associated with a declining Nationalist regime.

The protesters in the Middle East complained of rampant corruption, an ailment widely acknowledged by the Chinese regime as well. Those demonstrations quickly mushroomed from limited expressions of dissatisfaction into all-out rebellion. China, too, has had large numbers of popular demonstrations, often addressing a specific concern (e.g., government land grabs), but those could expand as well.

Beijing’s leaders should also be nervous about the “red eye disease,” the Chinese term for envy, given that Bahrain and Oman, two of the wealthiest places on the planet, have been rocked by protests. Faced with one of the highest levels of inequality in the world in a nominally socialist country, the Chinese leaders must know that a rising standard of living alone is no guarantee of satisfaction. People continuously compare themselves to others, and if they judge that those above them got there by illegitimate means they will be unhappy. This, too, is worrisome to the Chinese leadership.

So could these factors trigger broader unrest in China? That seems unlikely — at least for the near future — for two reasons.

China has long practiced information control, and has been extremely aggressive in monitoring and limiting the way information flows in the Internet age. While Middle East nations took desperate steps to shut down the Internet after it was too late, China has been working on this issue for years and has contingency plans and resources in place to deal with such events.

Finally, many Chinese, possibly most, are busy climbing the economic ladder and seeking out opportunities, and are not very interested in political aspirations -- yet. After all, Hong Kong prospered as a colony and continues to do so as a special enclave of China without a democratic system.

Someone once said that the only thing certain about China was uncertainty. Even if upheaval is not imminent, I do see a regime that will have to make significant changes to ensure that it does not one day end in exile or worse.