“Only development makes sense.” With those four words, thirty years ago last month, Deng Xiaoping launched China's opening to the world. It has since become the world's default manu- facturer. Its surpluses have underwritten a Western debt bubble of biblical proportions, and its ruling party has confounded all who predicted that it would have to cede political freedoms to a burgeoning middle class.

But Chinese growth has slowed suddenly from a canter to an uncomfortable trot. Its exports fell last month for the first time in seven years. Ten million migrant workers haunt its cities without jobs or any reason to return to their villages. Factory towns in the Pearl River delta whose streets used to be empty during the day now reel from daily demonstrations. If Beijing fails to find a new tolerance for dissent, the country's next wave of development will not be the sort that Deng had in mind.

China's next two anniversaries fall in June - 20 years after the Tiananmen Square massacre - and October, the 60th anniversary of the Communist revolution. They could hardly be more resonant; nor could the tensions between them be much more acute. The first will go unmarked except in private but will still serve as a reminder of China's last mass political convulsion and the regime's response. The second will be as triumphalist and tightly choreographed as the Beijing Olympics, but undermined by brutal economic realities that are far clearer now than when the world descended on China last August.

Demand for Chinese exports has slumped so fast that more than 7,000 factories closed last year in Shenzhen and Guandong provinces alone. Urban unemployment stands at 9.4 per cent and rising - double the official rate - according to the Chinese Academy of Social Sciences, and a leading Chinese journalist has forecast that the country is entering “a peak period for mass incidents” as a result.

How will Beijing react? It has a long, harsh and effective record of muzzling rural protest with show trials of the corrupt officials who so often trigger it and mass detention of participants. But large-scale urban unrest would take protesters and the authorities into unfamiliar territory.

The omens are not good. President Hu Jintao has vowed to build a “harmonious society”, chiefly by narrowing the gulf between China's poor and its new rich. But hopes that this vision might also mean more tolerance of dissent already look forlorn. Protesters in the poisoned milk scandal that has sickened 300,000 children have been detained. Parents seeking compensation after losing children in the Sichuan earthquake have been threatened with jail. And nearly 300 signatories of a petition demanding an end to the Communist Party's monopoly on power have been detained and questioned.

In a few weeks, migrant workers will return to the cities after Chinese new year. In July, some seven million new graduates will flood a labour market now struggling to absorb newcomers. These groups have nurtured expectations that their parents, in the year of the Tiananmen killings, could only dream of. In a global economic downturn, Beijing's power to fulfil those expectations is limited. But its duty to prevent a slide back to totalitarianism is clear. China will have to learn to listen to protest, not crush it.