The Dragon was fed wolves by the Big Apple!
The USA provided the right “Fertilizers” for China’s growth
While a mysterious puzzle looms over the thinking minds as to why is China what it is today? Let us decode the political situations that have made China so great that it is called the “factory of the world”.
The obscurity deepens as we understand China from India’s perspective. India and China were indeed on a similar economic footing till around 1980.
So what significant changes happened after 1980 that India was left behind and China progressed?
The United States of America (U.S.A.), a country not in favour of communism inevitably visited China in 1972 and subsequently in 1979 with a singular objective to gain leverage against the then U.S.S.R. (Union of Soviet Socialist Republic), today’s Russia.
The then President Jimmy Carter and the Chairperson of Chinese Communist Party, Mao Zedong met up personally to sign several agreements in January 1979, most notably the U.S.–China Agreement on Cooperation in Science and Technology, which established a framework for scientific exchange between the two countries. Other agreements were also signed to foster cooperation in areas like education, agriculture, and space exploration as a part of the normalization of U.S.-China relations.
China got the right “fertilizer” for its growth. The USA supported China with provision, funds, finances and support for:
- USAID programs
- Technical cooperation in agriculture, health, and education
- Energy and industrial modernization projects
- World Bank loans to China
- Scholarships and scientific grants
- Training Programs
- Investment Incentives
Today’s China is the result of USA’s support of 20 years at a stretch. Further, in 2001, the U.S. supported China’s entry into the WTO, which turbocharged growth even further.
For over 20 years, China offered advantages unmatched by any other nation:
- Extremely cheap labour
- A skilled and disciplined workforce
- Vast supplier networks
- Integrated clusters for every industry
- Efficient ports and logistics
- Speed of production and scalability
- Government-backed export subsidies
- Technology-friendly policies
- A massive domestic market of rising consumers
China could make anything—quickly, cheaply, and at scale.
China soon became the world’s largest exporter with a nickname “factory of the world”
Every product, from needles to aircraft parts, machines to technology, Rare Earth to cars, mobile phones to EVs, could be sourced from China.
A communist, an expansionist and an authoritarian country China thus became a large power house, the factory of the world, a compulsive trade partner to almost every country and a strong enough to dictate its terms on the world including the USA.