In the 1920s, China was a fragmented country with a weak central government and territorial warlords ruling the landscape. Then General Chiang Kai-Shek unified the country in 1928 becoming the dictator of all China. His internal war against the Chinese Communists knew no bounds, and even after the breakout of the second Sino-Japanese War in 1937, Chiang continued to use his best troops against the Communists rather than the Japanese. With the end of WWII, China emerged victorious but virtually penniless and with a growing civil war pitting the Nationalistic government of Chiang against the Communist Party of China.
Over the next four years these two factions would battle throughout China until the CPC finally won on October 1, 1949, driving Generalissimo Chiang Kai-Shek to the island of Formosa off the southern Chinese coast. The natives of this island were forced to retreat to the hills where they still live today. The Republic of China was formed on the island, which later became known as Taiwan with its capital at Taipei. The People’s Republic of China, with its capital at Beijing, was run thereafter by Mao Tse-Tung and the Communist Party of China.
With the takeover of China, the country entered a dark period of isolation and internalization,even though it earned UN status with the ouster of the Republic of China in 1971, and accepted a visit by President Nixon of the United States in 1972. For eight days the world was treated to a fanfare of Chinese culture splashed across the television set while Mao and Nixon set about to formally sign treaties negotiated by both nations. One of the greatest areas of tension in the world, the US-Sino standoff which had reached near cataclysmic proportions in 1950 as American forces reached the border between North Korea and China at the Yalu River. Mao Tse-Tung requested more air support from the Soviet Union stating, “If we allow the Americans to occupy all of Korea, then we must be prepared for the US to declare war on China.”
To defend China against a possible US-UN led invasion of the country, Mao dispatched over 300,000 Chinese soldiers to the front, 270,000 of whom met the Americans at the Chongchon River beginning the longest American military retreat in US history. Mao’s army had overrun all South Korean and UN forces and had repelled them back to the 38th parallel.
In 1966, Mao initiates his famous “Cultural Revolution” which sees the rise of the Red Guard and turmoil in the leadership of the country. Many purges take place and China distances itself further from the rest of the world. It’s not until 1970s that China starts to emerge onto the world scene culminating when diplomatic ties are restored with the United States. Though China continues to be fiercely loyal to Mao’s brand of communism, there is a growing distancing between China and the Soviet Union, a separation begun in the 1950s when the Soviets refused to fully support the Chinese in North Korea.
The 1980s find China in a struggle between growing free enterprise efforts, much of it led by exports to the US and Europe, and the steadfast diehards who want a return to isolation. By this time, reforms have gone too far and students from across the country stage massive sit-ins, hunger strikes and protests demanding more democratic freedoms. The road to free enterprise has taken root in China, and more and more reforms are implemented as the decade progresses and into the 1990s.
By 1999, the Washington Post commented in an article entitled, China’s Bold Leap into World Markets, “the deal also is expected to create millions of new jobs in Chinese textile plants and other businesses, as the United States and other countries lower their barriers to China's products. The pact will bolster China's burgeoning private firms, putting them on equal footing with state-run and foreign companies for the first time. China's legal system, accounting methods and other bureaucratic practices will be pressured to catch up to foreign standards.
The agreements were announced after six days of nail-biting negotiations by U.S. Trade Representative Charlene Barshefsky and her Chinese counterpart, Trade Minister Shi Guangsheng. Assuming that China's entry in the WTO goes forward without hitches, as now expected, the agreements will open China's markets to foreign goods and services, lower tariffs, facilitate foreign investment and protect Chinese exports.
One Western research firm said the agreement was as important as the historic decision in 1978 by China's reformist leader Deng Xiaoping to allow foreign investment in China as part of a broader plan to set aside Maoist political struggle and focus on modernizing China's economy.”
By 2001, China had become a full-fledged partner in the WTO and its increase in GDP went to over 10% annually, and has stayed there ever since. This is practically unprecedented in the World’s history. Here are some facts comparing the US and China in 2005 in a speech given by Richard W. Fisher, a member of President Carter’s team dispatched to negotiate with the Chinese on economic matters in 1979:
- America has a labor force of 147 million; China’s is 761 million—five times as large.
- China’s factories produced just 200 room air conditioners in 1978; today, they produce 48 million. Back then, they turned out just 11 billion meters of cloth; [in 2004], 35.4 billion meters (over 3 times as much).
- Chinese households have a rapidly increasing abundance of appliances and electronic products—refrigerators, TVs, DVDs, cell phones, etc.—at ownership rates not far below those in [the US].
- They have 28.3 million broadband users and 98.8 million Internet users, according to their Ministry of Information and Industry.
- There are 28 billion square feet of floor space under construction in China, compared with just 5 billion in the U.S. Five of the world’s largest shopping centers are now located in China.
- The U.S. manufacturing sector produced goods worth $1.5 trillion in 2004; China’s produced $3.4 trillion, adjusted for purchasing power parity.
- And the grand statistic of them all : On a purchasing-power-parity adjusted basis, economists put China’s gross domestic product at $7 trillion, compared with our $12 trillion—making it already 60 percent of [the US].
By the end of 2006, China’s Gross Domestic Production was second only to the United States, and closing fast. In third place, Japan, was but a mere 2/5 of China’s GDP. China enjoyed another year of double-digit growth as well as a positive trade balance with almost every other country on Earth
Chinese President Hu Jintao has promised to maintain the momentum of stable and fast economic growth as well as those measures necessary to avoid overheating. China's economic growth rate reached 10.7 percent in 2006, the fourth year in a row that the country's GDP growth rate exceeded 10 percent. Meanwhile, the consumer price index rose by 1.5 percent, about 0.3 percentage points lower than 2005.
But there are problems on the horizon, most notably with American conglomerates that bully about the Chinese government requesting special incentives to do business. One example is WalMart, the megachain store in the US that is rapidly expanding overseas.
According to an article published in The Nation on December 8, 2003, “One thing about Wal-Mart in China is familiar: The company's labor problems are making headlines.
“To be sure, the All-China Federation of Trade Unions (ACFTU), which has launched a public relations campaign against Wal-Mart over the firm's refusal to let its Chinese workers unionize, does not much resemble unions in the United States (where Wal-Mart is the target of almost forty lawsuits alleging forced overtime without pay; a class-action lawsuit claiming gender discrimination; and, most recently, charges by federal prosecutors that the company has violated immigration laws by hiring undocumented workers). It is, rather, a virtual extension of the Communist Party and the government, and the fight with the antiunion Wal-Mart does as much to showcase the labor group's own shortcomings as those of the corporation.