In Brief

The economic and political effects of the global economic crisis are still unfolding. Interestingly, when the Great Depression hit the industrial countries in the late 1920s and 1930s, Japan was one of the least affected industrial powers, in economic terms (see my earlier piece). Unemployment rose only slightly (to a measured high of just over 6 per cent compared with 33 per cent in Australia), industrial production dipped briefly, exports surged in a rapidly contracting world market and growth resumed its high pre-war long term trend of over 4 per cent in real terms. This did not mean that Japan was spared of a huge political back-draft from the Depression. The retreat of discarded casual workers back to poverty in rural communities became the seed-bed of a huge political convulsion that saw the ascent of the militarists and Japan’s headlong rush towards the disaster of the Pacific War. Anthony Garnaut’s subtle and important piece today, on the origins of the upheaval in Xinjiang in the travails of the casual Uighur workforce in Guangdong, is a sober reminder of the complicated political and social transformation that Chinese leaders have to manage today, beyond the looking-good macro-economic numbers. This is a huge challenge for China. It is a challenge that the rest of the world needs to understand in all its subtlety and from which it cannot dissociate itself.