The Rise of the New China
The China that existed in the 20th century (Old China), the China that is arising in the 21st century (New China), and what most Americans think China to be are very, very different things. Despite the fact that America and China have the two biggest economies in the world, we don’t understand each other. Americans don’t understand what China is about, and the Chinese don’t understand what the heck it is that we do here in the US of A.
This article is designed to alleviate a bit of that strain by describing how the China of the last century has risen past its humble beginnings in the 1950s to become the rising superpower that it is today.
The Old China
The 20th century marked a period of incredible change for China, as they transitioned from the dynastic tradition of ancient times to the Communist government of the People’s Republic of China that was founded in 1949. Mao Zedong led the newly reformed nation through a period incredible self-imposed tribulation known as the Great Leap Forward (大跃进) from 1958–62. This attempt to modernize China was headlined by gathering nearly 700 million Chinese peasants into communes, meant to drive a period of fervent economic development. Ruefully, however, it is estimated that close to 45 million Chinese citizens died as a direct result of the Great Leap Forward.
After the mistakes made in 1958–62, China did experience immense modernization and economic development, increasing their GDP by a factor of 20 in the forty years between 1960 and 2000. The shifting of economic policies that followed the period of Chinese Economic Reform (改革开放) is mostly responsible for these vast economic gains.
The Rise of “The World’s Factory”
As the 20th century wore on, China become an ever-more important member of the world economy, mostly in the role of the manufacturing. Unbelievably low wages allowed western corporations to relocate manufacturing operations to China. These low manufacturing costs came hand-in-hand with low-quality of the produced goods, such that “Made in China” became synonymous with poorly manufactured products. In the nineties, journalists dubbed China the “World’s Factory”, despite China b eing a distant third in terms of manufacturing output (even as late as 2005). Media presentation of China as a manufacturing powerhouse that was leeching the manufacturing jobs away from the US has caused a lot of anxiety. The crisis of millions of jobs evaporating from the continental United States, only to reappear in China, was an unsettling pill for many Americans to swallow. According to a 2013 survey by the Pew Research Institute, only 37% of Americans thought favorably of China.
This negative sentiment was underscored by the implicit form of superiority that arises from a position of economic superiority. This plot shows the ratio of the US GDP to the Chinese GDP from 1960 to 2015. As you can see, the US was sitting at a very comfortable 10 to 17 times greaterthroughout most of the 20th century. Under this backdrop, China’s sudden economic growth in the early 2000s shocked analysts, and certainly instigated many a hysteric and reactionary article attacking Chinese business tactics.
In short, the China that the world knew in the late 1900s was known for cheaply manufacturing goods and their periodic abuse of human rights. In the closing period of the 20th century, China experienced immense economic growth, but remained a relatively unimportant player in the global economy.
Old China’s Technology Sector
China is known for being the place that manufactures iPhones, which very prominently proclaim that they are “Designed in California” in an ultimately American distinction. The line is palpable between the “creators” and those that mechanically produce the objects laid out for them in schematics drawn in the United States.
China is a hard market for international corporations to enter (as Uber has recently discovered), because the Chinese government has kept a white-knuckled grip on China’s access to the internet. The Great Firewall of China (防火长城) is a government-controlled project that aims to restrict Chinese citizens’ ability to openly communicate with each other through various forms of social media.
Google has long been unusable in mainland China as well as other staples of the American Internet such as Facebook, Twitter, Instagram, and YouTube. This lack of global competition has allowed for homegrown Chinese versions of other products to arise. China’s Twitter copycat, Weibo has over 261 million monthly active users (MAU) and sees over 470 million daily video views (source). China’s dominant search engine, Baidu, reported is fulfilling 5 billion search queries per day (as compared to the 3.5 billion that Google was doing in 2013). China has two chat clients that have over 700 million MAUs: WeChat and QQ (previously arguable competitors with WhatsApp and Messenger, but may not be the case anymore).
The New China
The China that has been developing over the last 15 years is a very different beast than the afterimage of the industrializing China of the 20th century. Since China has entered the World Trade Organization (which didn’t happen by the way, until 2001), wages are way up and the government is encouraging young people to start companies with state-sponsored investment programs.
The New China features technology giants such as Alibaba ($194 market capitalization as of 2015) and Huawei ($61 billion revenue in 2015) that are actively investing capital into startups in the US. You may remember Alibaba from its record-setting IPO in 2014, or from its $250 million investment in Lyft, or even from its $800 million investment in AR firm, MagicLeap. Another arising Chinese tech giant, Huawei, is an emerging leader in consumer electronics with a number of flagship devices that are now for sale in the US.
The New China now has a majority control of the BitCoin network. Let me say that one more time to help it sink in: Chinese companies have majority control of the BitCoin network (70% of transactions as of Summer 2016). Chinese companies have surreptitiously moved to a position of power as they slowly gained market share through massive mining farms. In a recent secret meeting between those in positions of power in the world of BitCoin, American delegates attempted to persuade the Chinese BTC companies to alter the BTC protocol in ways that are outside of the scope of this article. However, in stark contrast to the previously consistent position of power that Americans had come to expect, the tables were turned. In a recent NY Times piece, Bobby Lee (CEO of BTC China) makes a statement that I think is one of the most important quotes of 2016, as it very clearly illustrates the shifting balance of power between the US and China:
The New China is an important member of the global economy and has interests of its own, that are independent of those that have historically had economical leverage over China. The New China is an emerging leader in technology that, as Mr. Lee frankly stated, cannot and will not be dictated by American corporations.
This New China has been manifested through the combined effort of millions of Chinese citizens working to achieve the “Chinese Dream” (中国梦). The Chinese Dream is different from the classic American dream in a variety of ways. Most importantly, while the American Dream features an individual family working hard to provide a comfortable life for themselves, the Chinese Dream centers around every Chinese citizen working hard to build a better future for China at large. President Xi Jinping is largely credited with championing this new vision for future development of China.
No Longer the “World’s Factory”
Mirroring the same outsourcing that has plagued American laborers in the last couple of decades, China is beginning to experience an economic shift from its position of manufacturing supremacy. Stalling growth in the manufacturing sector has led Chinese politicians to forecast a transitional stage from manufacturing to “consumption and services”.
The New China certainly isn’t perfect. It may not even be the dominating world leader in technology, but it is a recently added player with an ever-growing amount of influence that the West has yet to fully come to terms with. The New China promises to keep the world on its toes as it fights to restore itself to greatness.