BEIJING—The more I think about the Beijing Olympics, the more clearly I see big risks on the horizon. China's economic growth and its government's ability to manage social unrest tell me that domestic political instability isn't a serious near-term threat. But the Olympics are likely to shake things up.
First, no matter how effective the government response, the stage will be too big, and too well-lit, for Beijing to avoid at least a few small-scale Chinese demonstrations. We saw a handful in August when China staged its T-minus-one-year celebrations. Despite the government's best efforts to lock down the capital and the virtual certainty that fomenting (and writing about and photographing) unrest will provoke a harsh police response, the games will provide too tempting a target for would-be demonstrators to pass up. At home, China has little control of the blogosphere. Abroad, media coverage of all things China will fill the airwaves.
The leadership has even bigger problems. It can ensure that the hundreds of thousands of Chinese bused in for the games as spectators are loyal party officials, but the international visitors are another matter entirely. The Chinese authorities won't be able to stop Greenpeace, Amnesty International, foreign Falun Gong adherents, Dalai Lama supporters, and other activists from joining the throngs of visitors. Even some of the athletes will use the occasion as a political platform—and some foreign governments are likely to boycott the event altogether. That's likely to prove a big embarrassment for Beijing.
Then there's the environment. Small feeder cities outside Beijing have been hit with serious water shortages thanks to the enormous water diversions into the capital in preparation for the games (mainly for landscaping projects meant to beautify the city). More important, the central government can't really improve the air quality. Athletes struggling with this problem as they compete in strenuous outdoor events will be a major story during and after the Olympics—particularly since climate change and higher Chinese CO2 emissions are already issues of international concern.
As for reaction to the games in the United States, the Chinese leadership should brace for some tough media criticism. China's extraordinary rise, the official triumphalism that goes with it, U.S. anxiety over the state of the American economy, and the U.S. election cycle will likely produce tough scrutiny of the Chinese government when something—anything—goes wrong.
To spin an analogy, if you're Bill Gates, you shouldn't celebrate your success by throwing the world's biggest party and telling the invitees how well you're doing. You make nice and wear a sweater to show everyone you're really just a regular guy who's happy to welcome so many guests. Better yet, let's use Beijing's own analogy. Chinese officials love to tell foreigners that China is an awkward (but fundamentally good-natured) teenager that consumes a lot to keep the growth spurt going. But teenagers can be brash, unwilling to listen, and anxious to impress. This particular teenager likes to tell the neighbors that he accounts for nearly a third of global economic growth. Somebody should put a sweater on that kid.
But the biggest foreign-policy surprise of my visit came when I realized that Taiwan has re-emerged as a Chinese government priority. (Beijing considers Taiwan a domestic, not a foreign-policy, issue.) The threat that most preoccupies Chinese officials preparing for the Olympic Games—trouble with Taiwan—is overstated. (U.N. diplomats tell me that Taiwanese officials have pressed foreign governments that maintain diplomatic relations with the island—a couple of dozen mostly small nations in Central America, Africa, and the South Pacific—to boycott the Beijing Olympics. Some just might, especially given Taipei's promises of large injections of economic aid.) Still, the elections on the island next March will be significant.
But the Taiwanese government has again upped the ante by calling for a voter referendum on joining the United Nations under the name "Republic of Taiwan."
This is the last hurrah for outgoing Taiwanese President Chen Shui-ban and his embattled Democratic People's Party. The DPP trails the opposition Kuomintang Party by about 15 percent in the latest opinion polls, and Chen hopes to attach the question of U.N. membership and the name change to the March 2008 presidential election to boost voter turnout and to make the presidential vote a referendum on the issue. When the DPP triedz a similar stunt in 2004, pushing for a vote on outright independence, the KMT killed the election by boycotting it. But the U.N. question is more complicated, because 70 percent of Taiwanese support membership. A KMT boycott might not work this time. (Of course, it's an election ploy. Taiwan will not be invited to join the United Nations.)
Still, the new referendum poses a special problem for cross-Strait relations. It crosses a bright red line for Beijing, but it stops far enough short of independence that Taiwanese voters might be tempted to vote yes. The KMT is pushing for a referendum of its own that would call for U.N. membership but leave the island's name intact. China is not appeased.
Why do I think Chinese anxiety is overdone? First, U.S. Deputy Secretary of State John Negroponte warned immediately after Chen's referendum plan was announced that Washington opposes it. That matters. Second, the Chinese government now has a more nuanced understanding of Taiwan's politics, and Beijing has cultivated much closer ties with the Taiwanese opposition over the last couple of years. In addition, China now has more skin in the game. Today, about 500,000 Taiwanese are doing business in Shanghai alone, and their Chinese joint-venture partners are making lots of money. As a result, China isn't looking for trouble here. Well ... less than it used to.
But the biggest reason I'm optimistic for longer-term stability is that I expect the KMT to win the elections handily. That will put an end to a lot of the provocation. The current noise is just the storm before the quiet. We shouldn't write off Chen's moves as meaningless bluster. He's still president, and he knows the sun is setting on his career. That makes him even more unpredictable than usual in the run-up to the vote. In addition, while China's economic integration with Taiwan is growing, so too is Taiwan's attachment to democracy. That factor has strengthened the public sense of its distinct identity over the past several years.
The timing poses another problem. China's National People's Congress will convene in March, the same month that Taiwanese go to the polls. Add Beijing's growing excitement (and anxiety) over the run-up to the Olympics, and it will become harder for Chinese officials to keep a lid on anti-Taiwanese rhetoric. Though I suspect all this will ultimately prove much ado about very little, I fear that Taiwanese markets are in for a very rough ride over the next several months.