In early November, 50,000 villagers gathered to demonstrate against a dam project in western China. That same day authorities were called in to crush a strike called by 7,000 textile workers. A week earlier, retirees demanding pension payments mobilized and blocked traffic in a city in the eastern part of China, while in the northeast close to 1,000 workers held a demonstration outside a recently privatized department store.

According to Bert Keidel, an economist at the Carnegie Endowment for International Peace in Washington, these recent protests illustrate the challenges facing the ruling Communist Party as it presses forward with economic reforms that have transformed the country over the past decade. "China began the reform process with so many people in locations and in jobs that were really not productive and as market forces become more important, those people inevitably have to move to new locations and to new employment. And many of them won?t be happy about it," he says.

Mr. Keidel says there is discontent in urban areas, where previously government subsidies maintained high standards of living, and also in rural areas, where low farm prices keep most farmers in poverty. "It?s particularly important that the current work on building infrastructure and transport and urban infrastructure continue, because ironically the answer to rural poverty is really urban development and opportunities for farmers to do other things than farm," he says.

The protests in China are not unlike those that occur in other developing countries when inefficient state-run companies are privatized or government subsidies or benefits are cut. However, the disturbances have caused concern at the top levels of the Chinese government. The ruling Communist party, which once blamed subversives and foreign agents for unrest, now acknowledges that some of the protesters have legitimate grievances.

However, the party has ruled out democratic reform as a solution, and instead is pressing local party leaders to address people?s economic complaints in ways that keep the peace without any damaging political confrontations. Mickey Spiegel, senior researcher at Human Rights Watch in New York, says the government has adopted a carrot-and-stick approach to protesters.

"For instance, one thing they have done with many of these labor protests -- and this goes back to major protests up in Liaoning province several years ago -- they put several people in jail," she says. "But then they found ways to pay some of what was owed the workers and to try and do some re-training and find jobs for them. They were very, very careful not to have any type of major crack down and in essence it worked."

Additionally, the government has sought to keep word of the protests from spreading. State-run media often do not report on the protests for fear of riling up other disaffected groups. But according to Mickey Spiegel, the growing use of the Internet and email have made Party control of information more difficult.

"The Chinese government very much needs the Internet. They need it to be a player in world markets, to attract investors, to basically function in the world market today," she says. "But it?s really very concerned that the web has the potential to bring together disparate groups and make common cause. So, say for instance, that you?ve got workers in a factory in Guangzhou who are very upset about losing their jobs through privatization. The government does not want to see those workers hooking up with workers in Sichuan who are experiencing the same kinds of problems, and that could theoretically have simultaneous demonstrations or could exchange the kind of information that could put pressure on the government the way the government doesn?t want pressure put on it."

Analysts say that at the back of party leaders? minds are the 2008 Olympic Games, which Beijing will host. They believe the Communist Party leadership wants to control the spread of economic protests. At the same time, leaders know they cannot afford to scare off Olympic sponsors or spectators with the kind of harsh response that might remind the world of China?s brutal 1989 crackdown in Tienanmen Square.