China has performed an economic miracle since the late 1970s, with the transformation of what was formerly a command economy into a market economy, resulting in the emergence of a growing middle class as well as a good number of successful entrepreneurs.
Major cities across the country now boast gleaming high-rises, and an across-the-board increase in wealth is evident.
Nonetheless, there have been losers as well as winners, and many of those who are less well educated and with fewer marketable skills have generally been left by the wayside as the economy has been restructured and state-owned enterprises downsized. While the economy was being transformed, the traditional government-subsidised cradle-to-grave social welfare system was also dismantled, leaving many millions of people stranded.
Even government employees are not exempt from financial hardship. Finance Minister Xiang Huaicheng said in his report to the National People's Congress in March that 'some county and township governments failed to pay all the wages owed to their employees on time', and at the end of last year, 'a total of 6.5 billion yuan (HK$6.1 billion) had not been paid to their employees'. And, he said, 'although local financial departments have made great efforts to solve the problem of overdue wages, it is still hard to ensure that wages are paid in full and on time in some counties and townships'.
To deal with the many social problems that have emerged, China recently issued a white paper on labour and social security. This said that, at the end of last year, '730.25 million people were employed, accounting for 77.03 per cent of the total labour force'.
The figures mean that 22.97 per cent of workers were not employed, or a staggering 218 million jobless people in the country.
The problem is especially severe in the cities. Wang Dongjin, Vice-Minister of Labour and Social Security, said recently that the country faced a 'grim' employment situation, with the number of urban unemployed rising to 20 million. The situation is likely to worsen, Mr Wang said, with an average of 12 million to 13 million workers entering the job market each year, while only eight million jobs can be generated a year, even if the economy continues to grow at seven per cent annually.
To make matters worse, 150 million rural residents are flooding into cities looking for jobs, Mr Wang said.
While China's accession to the World Trade Organisation may help increase job opportunities in the long term, he said, in the short term WTO membership may actually aggravate the unemployment problem, as more rural workers unable to compete with foreign imports seek jobs in the cities.
The social discontent has been reflected in a rise in demonstrations across the country in recent months, ranging from oilfield workers in Daqing protesting against an increase in the amount laid-off workers were required to contribute to their retirement funds, to workers in Liaoyang angered over non-payment of wages and insufficient severance compensation, to retirees in Beijing demanding pension payments.
So far, the Government has successfully finessed the various protests that have flared across the country. For one thing, demonstrations are not being brutally suppressed by force, with the Communist Party apparently being more willing to allow the staging of peaceful protests. The Chinese authorities seem to be taking a little more seriously the right of assembly guaranteed by the constitution, a right which previously existed only on paper. But even now, protests are only tolerated if they are staged inside compounds rather than on the streets.
Moreover, by and large, the authorities have also been willing to negotiate with the protesters and to take action to alleviate genuine grievances, such as agreeing to honour back-pay owed to workers, though protest leaders are frequently dealt with harshly.
It is clear that China is determined not to repeat the mistake of 1989, when troops and tanks were called in to suppress peaceful demonstrations in Tiananmen Square. At the same time, the leaders hope to nip protests in the bud before they build up and attract widespread attention and public sympathy.
What the leadership fears are organised worker movements, such as Solidarity in Poland, which ultimately led to the overthrow of the communist party there. As long as protesters in various parts of the country do not link up and form a nationwide movement, they can be contained.
However, this assumes the economy will continue to grow at an impressive seven per cent every year, a performance that cannot be guaranteed if, say, the United States falls victim to a double-dip recession. Moreover, as Mr Wang makes clear, the unemployment problem is going to worsen in the coming years. If the Chinese economy should falter, protests will undoubtedly follow. China's current leaders certainly remember what Mao Zedong said: 'A single spark can start a prairie fire.'
Frank Ching  is a Hong Kong-based journalist and commentator.