February 1979, and the paramount leader of the People's Republic of China is taking in a rodeo. Dang Xiaoping is the first Chinese leader ever to tour the USA, even getting a VIP tour of NASA. After 30 years of isolation, Communist China is suddenly back on the international stage. And Deng is making it clear that they're ready to embrace the world, economically. He doesn't know it yet, but that approach will work, beyond all expectations.
The population of China is huge, 1.4 billion people, more than North and South America, Australia, New Zealand, Scandinavia, and all of Western Europe combined. According to the Chinese government, nearly 16% of the population lives in China's 15 megacities, each with a population of over 10 million. There are only 47 such cities in the world. As of 2018, China is responsible for 18.6% of global gross domestic product. It exports 41% of the world's computers, 34% of all air conditioners, and a whopping 70% of the world's cell phones (also my laptop and cell phone).
China has become a global economic powerhouse. How did they pull it off ? And why was the rest of the world so slow to notice China's rise to the top ?
During World War II, China and America are staunch allies in the battle against Japanese imperial aggression. And like America, China throws itself into mass production on an epic scale. Somewhere in China, a blanket factory in full blast. Three thousand women, working with handlooms, weave the blankets for the Chinese Army. But after fighting the Japanese, China is ton apart by a brutal civil war between the US-backed nationalists, led by Chiang Kai-shek, and the communist army and its leader, Mao Zedong. In 1949, Mao sweeps to victory, establishing the People's Republic of China.
In Mao's China, everyone is to share in the wealth. And that collective community will be represented by the state. Also, China is to be completely self-reliant in terms of finance, food, and goods. No more stock exchanges and no more diplomatic or economic relations with the Capitalist West. China, and its 542 million people will be cut off from the rest of the world.
To modernise his largely agrarian mega-nation, Mao encourages million of peasants to leave their farms and work in factories. And to make sure no one has a problem with that, he launches the cultural revolution, punishing dissenters by ordering them to reeducation camps. Paramilitary groups attack bourgeois intellectuals. Many cities are close to chaos. At least a million die. Meanwhile, China suffers from widespread famine, a corrupt infrastructure, and a busted economy. It's largely ignored by the rest of the world.
In 1960, China's economy is worth $59 billion, a figure dwarfed by the United States economy, Worth $543 billion. But in the early 1970s, America decides it's time to win over Mao, Taking advantage of a rift Between him and his Communist counterparts in the Soviet Union. Richard Nixon becomes the first American president ever to visit China. After 25 years of isolation, Mao seems prepared to reestablish ties with America. And Nixon hopes to encourage an American-style democracy in China. But when supreme leader Mao dies in 1976, his autocratic system doesn't die with him. It just takes a whole new direction. Enter Deng Xiaoping. When Deng takes China's reins at the end of 1978, he makes it clear that, while his party is not going relinquish any power, China will consider opening up to the West if they can make a little money out of it. This is the reason for Deng's cheerful visit to America. He's sending a signal to the world: Communist China is open for business. And they start by embarking on a program of economic reform, creating four special economic zones, or SEZs. The zones will be allowed to play by different rules than the rest of Communist China. Here's factories will be able to export goods to the West. And importers will be able to trade with Capitalist countries. The idea is that these zones will draw foreign investment and serve as mini economic engines for the rest of the country. And it works, spectacularly.
China's leader insist that these SEZs are just experiments in global trade. They remain dedicated to the ideals of Communism and Mao. One of the first special economic zones is the fishing village of Shenzhen, population 59,000. By 2016, its population swells to 12 million. Its GDP per capita increases an astounding 24,569%. Which explain why, over the next 30 years, China will begin designating more and more of these development zones. By 2005, China is constructing neighbourhoods the size of Rome every two weeks. Between 2011 and 2013 (6.6 Gigatons), China uses more cement than the US did in the entire 29th century (4.5 Gigatons).
In these early SEZs, factory managers take advantage of China's massive labor force to crank out huge quantities of low-cost exports. And productivity goes shy-high. In one SEZ, Guangdong province, one commodity rules them all. With more than 1,500 toy factories, this zone emerges as the world's largest toy production base, exporting billion of dollars worth each year.
Socialism with Chinese characteristics is how China starts fulfilling huge consumer demand for cheap goods in the West. Economically, China's catching up. But America's still number one. Between 1980 and 1990, China's economy almost doubles. But so does America's, keeping it far ahead. But with this opening up to capitalism, China's leaders now have a problem. Young people are increasingly demanding more than just the right to pursue profits. In the spring of 1989, in Beijing's Tiananmen Square, students begin leading daily protests, calling for democracy, free speech, and a free press. But on June 4th, the ruling Communist Party sends the students a clear message: Economic freedom is one thing. Political freedom is something else. Tanks and troops are dispatched to the square and open fire on the demonstrators. The Chinese government never does release an official death toll. But the event will become known internationally as the Tiananmen Square Massacre.
But while taking a stick to those protesting their authority, China's leaders offer a carrot to those interesting in making money. In December 1990, they reopened the Shanghai Stock Exchange, sparking stock market fever. China's still a communist nation, but its transformation to a market economy seems almost complete.
What would Mao say ?
By the end of the 1990s, the signs of China's economic success are everywhere. Memories of the civilians killed in Tiananmen Square and the freedoms they were seeking seems to fade, as workers' wages and their quality of living climb. And foreign businesses rush to set up shop to reach China's billion of consumers. Luxury items from abroad become highly-coveted status symbols. But most Chinese citizens can't afford expensive name-brand goods from overseas. A massive demand for counterfeit goods emerges, one that fuels a new boom for China's manufacturers, accounting for up to 8% of China's GDP. Soon fake Chinese-made goods are finding their way around the world. And sellers of the real stuff aren't happy.
The population of China is huge, 1.4 billion people, more than North and South America, Australia, New Zealand, Scandinavia, and all of Western Europe combined. According to the Chinese government, nearly 16% of the population lives in China's 15 megacities, each with a population of over 10 million. There are only 47 such cities in the world. As of 2018, China is responsible for 18.6% of global gross domestic product. It exports 41% of the world's computers, 34% of all air conditioners, and a whopping 70% of the world's cell phones (also my laptop and cell phone).
China has become a global economic powerhouse. How did they pull it off ? And why was the rest of the world so slow to notice China's rise to the top ?
During World War II, China and America are staunch allies in the battle against Japanese imperial aggression. And like America, China throws itself into mass production on an epic scale. Somewhere in China, a blanket factory in full blast. Three thousand women, working with handlooms, weave the blankets for the Chinese Army. But after fighting the Japanese, China is ton apart by a brutal civil war between the US-backed nationalists, led by Chiang Kai-shek, and the communist army and its leader, Mao Zedong. In 1949, Mao sweeps to victory, establishing the People's Republic of China.
In Mao's China, everyone is to share in the wealth. And that collective community will be represented by the state. Also, China is to be completely self-reliant in terms of finance, food, and goods. No more stock exchanges and no more diplomatic or economic relations with the Capitalist West. China, and its 542 million people will be cut off from the rest of the world.
To modernise his largely agrarian mega-nation, Mao encourages million of peasants to leave their farms and work in factories. And to make sure no one has a problem with that, he launches the cultural revolution, punishing dissenters by ordering them to reeducation camps. Paramilitary groups attack bourgeois intellectuals. Many cities are close to chaos. At least a million die. Meanwhile, China suffers from widespread famine, a corrupt infrastructure, and a busted economy. It's largely ignored by the rest of the world.
In 1960, China's economy is worth $59 billion, a figure dwarfed by the United States economy, Worth $543 billion. But in the early 1970s, America decides it's time to win over Mao, Taking advantage of a rift Between him and his Communist counterparts in the Soviet Union. Richard Nixon becomes the first American president ever to visit China. After 25 years of isolation, Mao seems prepared to reestablish ties with America. And Nixon hopes to encourage an American-style democracy in China. But when supreme leader Mao dies in 1976, his autocratic system doesn't die with him. It just takes a whole new direction. Enter Deng Xiaoping. When Deng takes China's reins at the end of 1978, he makes it clear that, while his party is not going relinquish any power, China will consider opening up to the West if they can make a little money out of it. This is the reason for Deng's cheerful visit to America. He's sending a signal to the world: Communist China is open for business. And they start by embarking on a program of economic reform, creating four special economic zones, or SEZs. The zones will be allowed to play by different rules than the rest of Communist China. Here's factories will be able to export goods to the West. And importers will be able to trade with Capitalist countries. The idea is that these zones will draw foreign investment and serve as mini economic engines for the rest of the country. And it works, spectacularly.
China's leader insist that these SEZs are just experiments in global trade. They remain dedicated to the ideals of Communism and Mao. One of the first special economic zones is the fishing village of Shenzhen, population 59,000. By 2016, its population swells to 12 million. Its GDP per capita increases an astounding 24,569%. Which explain why, over the next 30 years, China will begin designating more and more of these development zones. By 2005, China is constructing neighbourhoods the size of Rome every two weeks. Between 2011 and 2013 (6.6 Gigatons), China uses more cement than the US did in the entire 29th century (4.5 Gigatons).
In these early SEZs, factory managers take advantage of China's massive labor force to crank out huge quantities of low-cost exports. And productivity goes shy-high. In one SEZ, Guangdong province, one commodity rules them all. With more than 1,500 toy factories, this zone emerges as the world's largest toy production base, exporting billion of dollars worth each year.
Socialism with Chinese characteristics is how China starts fulfilling huge consumer demand for cheap goods in the West. Economically, China's catching up. But America's still number one. Between 1980 and 1990, China's economy almost doubles. But so does America's, keeping it far ahead. But with this opening up to capitalism, China's leaders now have a problem. Young people are increasingly demanding more than just the right to pursue profits. In the spring of 1989, in Beijing's Tiananmen Square, students begin leading daily protests, calling for democracy, free speech, and a free press. But on June 4th, the ruling Communist Party sends the students a clear message: Economic freedom is one thing. Political freedom is something else. Tanks and troops are dispatched to the square and open fire on the demonstrators. The Chinese government never does release an official death toll. But the event will become known internationally as the Tiananmen Square Massacre.
But while taking a stick to those protesting their authority, China's leaders offer a carrot to those interesting in making money. In December 1990, they reopened the Shanghai Stock Exchange, sparking stock market fever. China's still a communist nation, but its transformation to a market economy seems almost complete.
What would Mao say ?
By the end of the 1990s, the signs of China's economic success are everywhere. Memories of the civilians killed in Tiananmen Square and the freedoms they were seeking seems to fade, as workers' wages and their quality of living climb. And foreign businesses rush to set up shop to reach China's billion of consumers. Luxury items from abroad become highly-coveted status symbols. But most Chinese citizens can't afford expensive name-brand goods from overseas. A massive demand for counterfeit goods emerges, one that fuels a new boom for China's manufacturers, accounting for up to 8% of China's GDP. Soon fake Chinese-made goods are finding their way around the world. And sellers of the real stuff aren't happy.
The thing is China really wants to join the World Trade Organization to solidify its status on the world stage. And it has President Bill Clinton's support. But those counterfeit goods become a real sticking point. America insists that China's leaders creck down on copycat manufacturing. And China swears it will. But as of 2019, it's estimated that 85% of all the world's counterfeit goods still comes from China. Second place goes to Turkey, with 3%. China's top five counterfeit goods are ...
- Smart Phones
- Luxury Bands Bags
- Footwear
- Sportswear
- Cosmetics ( it's estimated that 20% of cosmetics on the market in China are fake.)
Clinton, like Nixon before him, hopes that Beijing's authoritarian government will loosen its grip over its people ones it opens up to doing more business with the West. But that rosy-eyed optimism may be what blinds foreign powers to the aggressive juggernaut China's economy is becoming.
By 1998, China's economy hits the $1 trillion mark. But America is still way ahead, hitting $9 trillion. Then, in 2008, an economic crisis hits. And this one is global, the worst economic disaster since 1929. In the US, more than 2.6 million people lose their jobs, 1.8 million businesses shutter, and 10 million homes are foreclosed in less than two years. That December, China is hit too, as exports to the US dry up. People just aren't buying like they used to. Many Chinese factories shut down, including one mega factory that produces the symbol of the season.
But remember, in China, the state runs everything. And China's new paramount leader, Hu Jintao, isn't worried. They'll just use the state's deep pockets to make up for any losses.
With no free press or political opposition to second-guess their policies, the Chinese government swiftly authorizes a $586 billion bailout. And Chinese factories quickly pivot from churning out goods for export to making goods for domestic consumers. For China, the crash of 2008 turns out to be less of a knockout and more of a glancing blow. Soon, they're ready to rise again. Using its newfound economic leverage, China starts quietly investing in far-flung developing nations in Africa and Asia.
One of the most ambitious policies is called the Belt and Road Initiative, a vast series of infrastructure projects around the globe. These include a 12,000 kilometer railway stretching from Yiwu in coastal China all the way to London, a massive network of highways connecting Eastern China to Pakistan's deep water ports, and a 1,833 kilometer pipeline that can carry natural gas from Turkmenistan across Central Asia to the Chinese border. Around the world, China has invested more than $1 trillion in infrastructure projects, across dozens of countries.
This latest strategy of China's newest leader, Xi Jinping, really makes the West sit up and take notice.
Is China taking over the world ?
Supporters of China's international investments say that these infrastructure projects will lift millions of people out of poverty and create jobs in poorer countries. Critics say it's a land grab, using check books instead of swords. Either way, it's increasing China's overall wealth at an astronomical rate. By 2018, China's economy is closing in on America's. It's not a matter of if, but when China overtakes the US. The best guess is by 2025, making China the world's number one economic superpower.
Less than 50 years ago, Nixon saw China as a struggling third-world country. Today, it's China that the rest of the world is playing catch-up to. Most will agree that their brand of state-sponsored capitalism works when it comes to making profits, perhaps even better that America's messy democratic system. But history tells us nations are not built on economic success and power alone. So how will China survive long-term ? Will people demand more choice, more say in their own government ? Whatever its future, it's safe to say no one is ignoring China anymore.
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