xecutive Summary
There has been little change in China’s political landscape in recent months.
The 50th anniversary of Tibet's failed uprising against Beijing passed by with little incident on March 10,
as did the 20th anniversary of the Tiananmen Square protests on June 4 aside from poignant scenes in
Hong Kong where at least 100,000 people turned out for a candlelit vigil in Victoria Park. This was
largely due to a concerted effort by Chinese authorities to stifle dissent. There has as yet been no response
from Chinese authorities to the request by US Secretary of State Hillary Clinton to give full details of
events, and resulting fatalities, from those momentous events two decades ago.
The main issue in China, as everywhere else, remains the economy. The country has not been immune to
the global recession. The sharp economic downturn has been most hard felt in the job market, with
unemployment in urban areas – the only figure released by Chinese authorities – hitting 4.3% at the end
of March.
Following years of persistent double-digit growth (during which period Chinese citizens largely refrained
from greater calls for democracy and overlooked the Communist Party's shortcomings in return for rising
standards of living), rapidly weakening economic activity is now threatening to erode the confidence
established in the government during the most recent boom period.
China announced a CNY4trn (US$590bn) stimulus package in November, which it hopes will support the
200,000 new jobs it needs to create each year for university and school leavers, as well as stimulate
domestic consumption as its export industry continues to suffer. A series of infrastructure and public
works at its heart could allay some of the distress citizens are feeling from the fiscal climate.
The Chinese arms industry continues to boom, however, and we have made few changes to our outlook
for the industry. That being said, economic difficulties, which are likely to continue, at least in the short
term, could stunt growth in the sector.
This quarter, we have introduced a significant new aspect to BMI's defence reports, which is the City
Terrorism Rating (CTR), which assesses the risk of a terrorist attack. The CTR takes into account the
overall BMI Terrorism Rating for the country in question. It also incorporates the ‘prevalence’ of
terrorism, which recognises the frequency of attacks, and whether the city is a target for terrorists. The
CTR also recognises the ‘threat' of terrorism in terms of the likely numbers of victims and the ability of
groups to launch sustained campaigns.