Recent unrest in China adds challenges for Chinese leaders: Moody's

By Kim Young-gyo
HONG KONG, June 21 (Yonhap) -- Moody's Investors Service said Tuesday that the recent unrest in the southern part of China could pose some challenges for the country's leaders.
China's state-run Xinhua News Agency said earlier that police in Guangdong province had arrested 19 people who are allegedly connected to a two-day protest in the region.
The unrest erupted on June 10 after a pregnant woman from Zengcheng City fell into a dispute with local security personnel who asked her to move her vending stall, which was placed in front of a supermarket, according to a statement issued Friday by the government of Zengcheng.
"A continued escalation of unrest could lead to political and economic instability, such as what happened during widespread labor unrest in (South) Korea in the late 1980s, or worse, as in the still unfolding Arab Spring in the Middle East and North Africa," said Tom Byrne, senior vice president at Moody's.
"High and stubborn inflation would likely feed and fuel popular discontent. Odds of a pernicious scenario playing out, however, appear low at this time."
Mass protests have recently become more frequent in China.
Earlier this month, clashes between migrants and police broke out in Guangdong after a worker who went to ask for unpaid wages at a ceramics factory was stabbed. In May, riots broke out after a Mongol herder was run over and killed by a Han-Chinese truck driver in the Inner Mongolia Autonomous Region.
Moody's said such incidents are symptomatic of underlying governance shortcomings.
"These episodes point out that underlying ethnic tensions and personal injustices are also factors that contribute to social unrest," Byrne said.
The credit appraiser, however, said it does not see negative credit implications from the recent unrest in China, as such protests have not had any systemic adverse effects on either the stability of China's central government or on the health of its economy.
It said the Chinese authorities' response to the recent surge in unrest seems more balanced than in the past, with swift punishment of officials and others held responsible in some cases.
ygkim@yna.co.kr