Gordon G. Chang,

In the first week of this month, tens of thousands of residents of Shifang first besieged and then ransacked the headquarters of their city government as they sought to stop the construction of a $1.6 billion molybdenum-copper alloy factory.  Citizens feared the plant would increase already-high cancer rates in the community.

A June 30 signing ceremony for the project unexpectedly triggered days of disturbances in the city in southwestern Sichuan province.  The demonstrations led to the arrest of protestors, the reassignment of the city's Communist Party secretary, and the abandonment of the chemical complex.

There have been other successful not-in-my-backyard protests in China.  For instance, in 2009 local residents stopped a garbage incinerator in Guangzhou and a high-speed rail line in Shanghai.  Last year, they did the same to a paraxylene plant in Dalian.

This time, we witnessed a "stunning" marriage of a local demonstration with nationwide support expressed through the internet, as Xiao Qiang of the U.S.-based China Digital Times told CNN.  There is, perhaps for the first time, a China-wide force that can, without organization or leadership, stop the Communist Party dead in its tracks.  The Chinese people can now form coalitions instantaneously: Shifang officials announced the end of the chemical factory?over the city's Twitter-like weibo account?within two days of the beginning of the riots.

The implications for China's leaders are unmistakable, despite the attempt of official media to put the best face on events.  "It is certainly not a revolution," opined the Chinese-language version of the Global Times, the nationwide newspaper controlled by People's Daily, the Party's flagship publication.  In a sense, that assessment was correct.  Unlike the insurrection in Wukan that started last fall, residents of Shifang did not eject the Communist Party from their community.

But there was plenty for Beijing to worry about.  Chinese people, despite what most political scientists think, are making the connection between bad local governance and their country's one-party system.  "It is the 4th of July?236 years ago America achieved independence, and 236 years later the Shifang people are fighting for their own rights and confronting the government," wrote one weibo microblogger.  "The government has repeatedly squandered the people's patience.  It is time for us to be independent."  Han Han, China's celebrated literary bad boy, added to his reputation by posting "The Liberation of Shifang."

Shifang, despite what Han Han implies, has yet to be liberated, but the Chinese people are nonetheless becoming a powerful force.  At the lowest level, they are pushing local governments around.  We are going to see more pollution-generating projects abandoned or delayed as demonstrators take to the streets.  Growth will give way to "green," from one end of the country to the other.

Investors, both foreign and domestic, loved the Chinese system because they could make deals with local cadres and not have to worry about what the laobaixing?common folk?thought.  With the right payments, they could clear peasants off the land they and their ancestors had farmed for hundreds of years to make way for plants spewing carcinogens, or golf courses, or single-family homes.  As a result, dictatorial China was viewed as especially conducive to rapid economic development.

"Development is the ultimate principle," Deng Xiaoping famously pronounced when he ruled China.  For three decades, there has been a consensus in Chinese society that the economy came before everything else.  That understanding, not surprisingly, underpinned an average of 9.9% GDP growth since the end of 1978.

Now, however, a modernizing society is developing new values, and as it does so, the political stability of recent years is fast eroding.  Since Deng took over at the end of the 1970s, the primary basis of legitimacy of the Communist Party has been the continual delivery of prosperity, but now leaders are not adapting as fast as they should to changing Chinese values.  At times, the Party will make tactical retreats, as it did in Shifang, but it has been unable to develop a more sustainable form of governance.

The recent events in Shifang, therefore, suggest China is entering a new phase, which is bound, at least in its initial years, to undercut economic development.  With the economy faltering badly, this could not come at a worse time for the country's shaky political system.

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