The recent lashing out by the Chinese leadership at a variety of foreign states seems bizarre to me. I noted in an earlier post that it occured to me it was not dissimilar to Arab tyrants blaming everything on Israel. The same thought occured to the mighty Vodkapundit and similar thoughts are occuring to the Junkyardblogger too. The JYB suggests that it could be a sign that the leadership is beginning to feel threatened by internal compaint and has attempted to direct the hotheads to external sources of anger exactly as the Arab despots have.
There is some evidence that if this is the case they have good reason to try it; for example there was a riot about environmental degradaion recently and there are ongoing complaints about the general level of corruption at all levels of government. However it seems odd to me that the Chinese should be picking on both Taiwan and Japan within such a short period of time. Neither of the two nations seems to have been doing anything that deserved the sort of response we have seen in the last month or so. I suspect in fact that the anti-Japan riots have in fact got out of hand and this may, in part, be because the Chinese have all sorts of interesting omissions in theit history books too (such as a failure to discuss Mao's disastrous "Great Leap Forward" which killed 15-40M Chinese).
One good question is what is going to be the result? Firstly I suspect we will see a significant drop in foreign investment in China from Taiwan and Japan, and quite possibly from other places too. One unknown is whether the world needs China more than China needs the world? China is indeed the worlds factory at present, but it doesn't make anything that can't be made elsewhere, albeit at a higher price - and for that matter the current price seems to be being kept artificially low by the Chinese authorities. If Walmart and co decided to employ an army of Brazilians, say, they could probably make almost everything that China does - however the investment in new factories would not happen instantly so there is no way that this can be done as an overnight switch. If the current unrest in China continues it seems likely that there will be a search for alternative locations for sweatshops and considerable investment outside China.
If we do see a loss of foreign investment in China then the Chinese economy could catch a cold and see some sort of a recession. This could be tough for the Chinese authorities because they really need the foreign investment to transition a lot of their older industries to newer ones. If there is no way to reform the older industries then the likelihood is that there will be more unrest and thus more complaints and thus we see the potential of a vicious circle as China steps up the xenophobia to divert anger which results in even more reduction in investment and trade and hence more unrest.
China's belligerence may well force Tokyo and Taipei into each other's embrace, forming a "virtual alliance" against Beijing. This won't settle well with China at all, which considers Taiwan a "renegade province."
And that potential alliance is precisiely what I was talking about in the Coprosperity Sphere post of a few weeks ago and it really does have a lot of nasty geostrategic consequences for China.
All in all it seems to me that these protests are going to harm China in the longer term even if in the short term they help the government stay in power. Perhaps worse they could poison China's relationships with the outside world so much that it is left to crash and burn when it could be rescued and thus inspire yet more xenophobia as the Chinese population fails, again, to connect cause with effect.