Almost from the moment it began, the end of the Chinese economic miracle has been much anticipated. Thick and fast, the books have come explaining how it will end badly. A country wallowing in debt.
The collapse of the property market. The demand for democracy from a growing middle class. All have been put forward as reasons for the inevitable terminal crisis.
Even those impressed by the country’s rapid growth took comfort from the notion that the west would continue to dominate advanced manufacturing while China would be stuck assembling TVs. And while the wait for its much-predicted demise has gone on and on, China has become the workshop of the world. This process has come in two distinct phases.
Initially, it is true, there was a concentration on low-cost manufactured goods because cheap labour costs provided a competitive advantage. Firms left for east Asia in search of higher profits. Without China 1.0, Donald Trump would have remained a New York property developer and Brexit might never have happened.
Yet, the Chinese were not content to remain solely the producers of low-cost consumer goods and began to invest heavily in higher-end manufacturing. China 2.0 shattered the illusion that it would forever remain a developing economy destined to produce low-grade products and little else. The market in solar panels was captured.
It became the world leader in batteries and electric vehicles. It no longer has to import machine tools from Germany because it is now capable of making its own. The rise of the far-right Alternative für Deutschland is in no small measure due to the threat posed by China to German manufacturing jobs.
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