[MUSIC] So if the state is potentially going to collapse, where are those sources of political instability that could trigger that to happen? One of the things that we've seen over the last seven, eight years is the rise of ethnic unrest. In 2008 major riots in Tibet, driven largely by religious support for the Dalai Lama and by an influx of Uighur and Han people who then came to dominate the business sector in Lhasa the capital of Tibet and in other Tibetan cites. In 2009 we saw, again major riots It's in Xinjiang where many Han people were killed and these were driven largely by a sense of inequality, and also the sense that Uighur women were being mistreated in Quan Dong where they had gone to become migrant laborers. Now, the following figure shows, two maps actually, shows a strong overlap between the Uighur regions on this ethnic distribution map, which the ethnic regions are in blue, and they match with the poorest income levels on the income map. And because of this we have seen Uighur terrorism in different parts of China in cities such as Kunming, Beijing and. So, if we look at this map, these two maps here, here we have the blue area is really the Uighur regions in blue. This is a minority of about 12 million people I think who live in this section of China, and there's their section in blue. And if you look at the map, in terms of per capita GDP, these are the poorest areas in the province of Xinjiang so we can see this immediate overlap. And, this is a long-term problem that has existed in Xinjiang which is the poor, the Uighur's live, in poor areas. And the Hans, who are the red up here, live in what tend to be the wealthier parts. And this would probably be so the wealthier parts of the province. Another problem, and this is my own concept, what I call the externalities of development, is that China's a very unique country because it's having rapid economic development on so many fronts. Buildings going up, land, bridges, so much new roads all this kind of stuff but it's happening within the context of very weak laws and regulation. And so, what happens is that there are massive economic and social problems that emerge because of this weakness. Someone will go out and build a factory and they create a horrible environmental problem and the courts have a hard time getting them to judgement. So, the result is people get involved in unrest, social unrest, and social mobilization. And so this is really, if you look at China slowing down now, but over the last few years the most rapid urbanization in world history with poorly regulated land laws and the result, massive land grabs by the officials, and fights with peasants. 50% of all the protests in China in 2010 were the result of land conflicts. And developers who don't complete their projects, they may move on and what happens? The apartment owners get together, get organized, hire a lawyer and then you get these kinds of problems in Shanghai and in other cities that the state then needs to deal with. As I mention, environmental degradation with no compensation and weak environmental laws can often lead to riots. Now, the final point that I would mention here before we get on to the discussion of inequality, is really a population bombshell that exists for China. And this is caused, in part, by the one child policy which has created a very heavy dependence burden. What I mean by that is that when workers retire, there are very few new workers because of the low population growth available to replace them. So over time, we see that each worker, more and more needs to support more and more people and that pretty soon, China's going to reach the state where each worker is going to have to support five retired people. One way of thinking about this, it's my CNN ten second sound bite, is that China will be the first state to get old before it gets rich. And so this is going to be a huge burden on the state. And we also can see that even at the other end of the population level, we can see that at the current time now, there is a rising unemployment as the economy is slowing dramatically. And more and more people are graduating from college, and having difficulties to find jobs. And social unrest in many countries has been caused when young college graduates can't find jobs.
