The Political and Economic Consequences of Nationalist Protest in China: The 2012 Anti-Japanese Demonstrations

What are the consequences of nationalist unrest? This paper utilizes two original datasets, which cover 377 city-level anti-Japanese protests during the 2012 Senkaku/Diaoyu Island crisis and the careers of municipal leaders, to analyse the downstream effects of nationalist unrest at the subnational level. We find both political and economic consequences of China's 2012 protest demonstrations against Japan. Specifically, top Party leaders in cities that saw relatively spontaneous, early protests were less likely to be promoted to higher office, a finding that is consistent with the widely held but rarely tested expectation that social instability is punished in the Chinese Communist Party's cadre evaluation system. We also see a negative effect of nationalist protest on foreign direct investment (FDI) growth at the city level. However, the lower promotion rates associated with relatively spontaneous protests appear to arise through political rather than economic channels. By taking into account data on social unrest in addition to economic performance, these results add to existing evidence that systematic evaluation of leaders' performance plays a major role in the Chinese political system. These findings also illuminate the dilemma that local leaders face in managing popular nationalism amid shifting national priorities.