In 20 years, China has changed but its relationship with the West has deteriorated

Two decades ago, after fifteen years of efforts 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 reduction in customs duties to enter the Chinese market, an opening up of China to foreign investment, protection of intellectual property.

At the time, although the eyes of the world were more on Afghanistan as a result of the September 11 attacks, it was the promise of developed countries to enter an era of growth driven by open markets. Chinese and the acceleration of trade.

Golden age of globalization

The event did accelerate global growth and marked a sort of golden age of globalization. It has helped transform the Chinese economy and lift nearly 600 million Chinese out of poverty. But it also precipitated industrial decline in developed countries and made Western countries feel that they had not been paid enough in return for the concessions made.

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

In 20 years, Chinese GDP has increased tenfold

For China, the transformation has been spectacular. In 2001, she was the 7e world power with a GDP of 1.3 trillion dollars. Today she is the 2e with a GDP of 14.7 trillion dollars, behind the United States at 21 trillion.

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Chinese exports now account for 15% of the world total, against 4.3% in 2001. Its imports have also exploded. They represented 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 no longer the sole engine of the Chinese 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 the GDP. The figure was 21% in 2000. It peaked at 36% in 2006.

→ ANALYSIS. China is banking on its domestic market to achieve 6% growth in 2021

During the last two decades, the Chinese state has made a huge effort to equip itself, for example building highways at a 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 astonished 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 came out of China

At the same time, Chinese companies have started to step outside their borders. In 2000, factories in the country 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.

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 break down. ‘impose its own rules.

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

With Trump, the time of conflict

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

But Chinese imports to the United States have not declined, on the contrary. The illusion of a partnership beneficial to Western interests has lived. From now on, everyone knows that they will have to deal with a partner who shows his refusal of Western democratic values. And who also knows how to defend his interests.

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