Revolution of rising expectations could hit China's economy | Barry Eichengreen

Is the regime at risk of the kind of protests seen in Hong Kong, France and Chile?

For more than a decade, China has accounted for a quarter or more of global economic growth. With its economy currently navigating a rough patch, the question is whether this impressive performance will persist.

Cassandras pointing to the possibility of a Chinese growth slowdown regularly invoke the spectre of a middle-income trap. Now that China is no longer poor, they warn, growth rates will fall, just as they have in all but a handful countries that have reached the same income level. Growth is harder, they observe, when it can no longer be based on brute-force capital accumulation. Now, it must be based on innovation, which is difficult to bring about in an economy that is still centrally directed.

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If unrest does, in fact, break out at some point in the future, foreign investors will be quick to withdraw