HOW CHINA BECAME THE WORLD’S INDUSTRIAL SUPERPOWER – AND WHY THE US IS DESPERATE TO STOP IT
CHINA’S INCREDIBLE ECONOMIC RISE
In just 70 years, China transformed from one of the poorest nations on Earth to the largest economy globally. This staggering growth is reshaping the world order and explains why the U.S. is increasingly aggressive toward China.
THE HISTORICAL CONTEXT: FROM DOMINANCE TO DECLINE AND BACK
In 1820, China represented one-third of the global economy. But with European colonization, its share dwindled to 5% by 1950. Following the Chinese Revolution in 1949, China began its rise once again, with its GDP now accounting for 19% of the global economy—surpassing the U.S., which stands at 15%.
THE IMPACT OF INDUSTRIALIZATION
China’s transformation from an agricultural society to the world’s leading industrial power is at the heart of its success. Before the revolution, China was largely agrarian, but its leaders recognized the need for industrialization, heavily investing in infrastructure and manufacturing. This development turned China into a global manufacturing hub, producing one-third of the world’s goods by 2010.
CHINA’S STRATEGY: STATE-LED INDUSTRIAL GROWTH
China’s economic model is unique. The government controls key sectors like banking, telecommunications, and transport while allowing market forces to flourish. This “market socialism” balances state intervention with market-driven growth, helping China industrialize rapidly without sacrificing state control over essential industries.
TECHNOLOGY TRANSFER: THE KEY TO CHINA’S SUCCESS
One of China’s most successful strategies has been technology transfer. Foreign companies investing in China are required to form joint ventures with local firms, allowing Chinese companies to gain access to cutting-edge technologies. This has led to rapid industrial development and the rise of tech giants like Huawei.
CHINA AS THE WORLD’S SUPPLY CHAIN
China’s manufacturing ecosystem is unmatched, with every part of the supply chain—from textiles to electronics—concentrated within its borders. Even as the U.S. pressures companies to leave China, many find it difficult due to China’s efficiency, skilled workforce, and complete supply chain integration.
THE U.S. RESPONSE: DE-INDUSTRIALIZATION AND FINANCIALIZATION
While China industrialized, the U.S. de-industrialized. Since the 1980s, the U.S. shifted from manufacturing to a service-based economy. As a result, its industrial capacity shrank, leaving many regions in economic decline. The U.S. economy became heavily financialized, relying on Wall Street rather than real industrial growth.
THE NEW COLD WAR: ECONOMIC DOMINANCE VS. MILITARY TENSION
The U.S. views China’s rise as a direct threat to its global dominance, triggering the new Cold War. Economic sanctions, trade wars, and restrictions on China’s tech sector are all aimed at curbing China’s continued growth. The U.S. is now attempting to return to industrial policy, but faces challenges due to decades of neoliberal policies that hollowed out its manufacturing base.
CONCLUSION: WHY THE US CAN’T OUTCOMPETE CHINA
The U.S. is struggling to compete with China’s rapid industrial and technological advancements. The irony is that while the U.S. once led the world in free-market policies, it now finds itself reintroducing state-led industrial strategies to keep pace with China’s market socialism. The future of this economic rivalry will shape the world in the coming decades, with China showing no signs of slowing down its rise.
