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In twenty years, China has transformed, but its relationship with the West has deteriorated

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Two decades ago, after fifteen years of effort and negotiations, China officially became a member of the World Trade Organization (WTO). The marriage contract was then a technical document of 800 pages. It provided for a massive lowering of customs duties to enter the Chinese market, an opening of China to foreign investment, protection of intellectual property…

At the time, even if the eyes of the world were rather turned towards Afghanistan because of the attacks of September 11, it was for the developed countries the promise of entering an era of growth driven by the opening of Chinese markets and the acceleration of trade.

Golden age of globalization

The event did indeed accelerate global growth and mark a sort of golden age of globalization. He has contributed to the transformation of the Chinese economy and helped lift nearly 600 million Chinese people out of poverty. But it also precipitated industrial decline in developed countries and gave Western countries the feeling that they had not been sufficiently repaid for the concessions made.

Twenty years later, the relationship between China and developed countries is at an all-time low. Hopes of China rallying to the Western model have been dashed, while globalization has revealed its limits.

In 20 years, China’s GDP has increased tenfold

For China, the transformation has indeed been spectacular. In 2001, she was the 7and world power with a GDP of $1.3 trillion. It is now the 2nd with a GDP of 14,700 billion dollars, behind the United States at 21,000 billion.

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Chinese exports now weigh 15% of the world total, against 4.3% in 2001. Its imports have also exploded. They accounted for 3.8% of the world total in 2001 and 11% today. China has become a key player in international trade, the world’s largest exporter and second largest importer.

International trade is no longer the sole engine of China’s economy

However, international trade is far from the only engine of the Chinese economy which relies more on investment and consumption. Today it weighs only 18% of GDP. The figure was 21% in 2000. It peaked at 36% in 2006.

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During the last two decades, the Chinese State has made a huge effort to equip, for example building highways at the rate of 10,000 km per year. The country has seen domestic consumption explode with the rise of a new urban middle class.

Thus, in 2000, we were surprised to see that, for the first time, more than a million Chinese households had bought a car, a figure twice as high as the previous year. In 2020, 25 million new vehicles were sold in China, making it the world’s largest automotive market.

Chinese brands have come out of China

At the same time, Chinese companies have started to move beyond their borders. In 2000, the country’s factories were running on behalf of foreign brands. Today, Huawei, Xiaomi, Lenovo, Tencent or Geely impose their name. “Made in China” is no longer automatically synonymous with “low-end”. In the top twenty most valued global brands according to the Brand Directory ranking, there are now nine Chinese brands.

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This boom has benefited everyone, since Chinese growth was responsible for a third of global growth in 2019. And yet, relations between China and developed countries have continued to deteriorate, as China tries to impose its own rules.

Thus, it has forced foreign multinationals to transfer technologies to gain access to its market. This allowed it to take giant steps to build its own TGV and its nuclear power stations which are now formidable competitors in foreign tenders. China has also protected parts of its market and maintained state subsidies, so that Chinese steel and solar panels have crushed foreign competition.

With Trump, the time of the conflict

Already, in 2016, globalization was the subject of criticism. With the election of Donald Trump, the conflict has become open. The president has repeatedly portrayed China as a disloyal rival and added trade sanctions to curb trade. He also marginalized the WTO, guilty in his eyes of not having been able to crack down on China.

But Chinese exports to the United States have not fallen, on the contrary. The illusion of a partnership beneficial to Western interests is gone. From now on, everyone knows that we will have to deal with a partner who displays his rejection of Western democratic values. And who also knows how to defend his interests.

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