China's Economic Rise: Miracle or Inevitable?
Mainland China Only
If you look solely at mainland China's history, it is difficult to fathom how China rose to become the world's largest exporter with an annual merchandise trade surplus of $500 billion.
From 1958 to 1962, China underwent the Great Leap Forward. This was an economic disaster and caused famine.
From 1966 to 1976, China underwent the Cultural Revolution. "In fact, the Cultural Revolution crippled the economy, ruined millions of lives and thrust China into 10 years of turmoil, bloodshed, hunger and stagnation" (citation: The Guardian, The Cultural Revolution: all you need to know about China's political convulsion, May 10 2016).
"In 1974 Taiwan recorded a total trade volume of US$13 billion, more than US$1 billion above the level attained by the People's Republic of China" (citation:
Factory Women in Taiwan By Lydia Kung (Page 37)). Taiwan was a larger trade power than mainland China.
In 1976, mainland China had no money. China's trade with the world was break-even from 1976 to 2004. China only accumulated a significant trade surplus after 2004.
How in the world did mainland China make the leap from a backward economy with no capital or civilian technology to become the world's largest exporter in 40 years? This is truly a miracle.
By the way, while China's development of the hydrogen bomb in 1967 and DF-5 ICBM in 1971 were impressive, both military weapons contributed nothing to China's economy. China never made any money from its hydrogen bomb or ICBM, because China never exported either weapon to a foreign country.
----------
Taiwan and Mainland China as a single economy
If you add Taiwan into the history of China's economic rise then the picture changes dramatically.
Taiwan recorded its first trade surplus of US$34 million in 1970. Forty-seven years ago, a million dollars was a lot of money. By 1971, Taiwan's trade surplus had jumped four-fold to US$145 million. The rest is history. Taiwan piled up huge trade surpluses in the following decades.
Taiwan's trade surplus made it a target of US Section 301 trade legislation. "Taiwan was among the Asian economies that were pressured to open their markets during the 1980s under Section 301 of the U.S. Trade Act ..." (citation:
The Taiwan Tobacco and Liquor Corporation: To ‘join the ranks of global companies’ | NCBI).
Taiwan's economic history is very different from Mainland China's. Taiwan never suffered the ill effects of a Great Leap Forward or Cultural Revolution. In sharp contrast, Taiwan's economic development was very smooth and uninterrupted.
"Founded in 1954, Victor Taichung Machinery Works Co., Ltd. started with making conventional lathes in Taiwan and now steadily supplies CNC lathes and machining centers by devoting her management to non-stop R&D and innovations" (citation:
Victor Taichung Machinery Works Co., Ltd., "Taiwan Best Manufacturer of CNC Machine Tools & Plastic Injection Molding Machinery" | Manufacturers.com).
"1964: General Instrument Taiwan factory is granted foreign license #1" (citation:
GENERAL SEMICONDUCTOR AND DIODES DIVISION | Vishay). General Instrument's Semiconductor Components Division had only been formed in 1960. Taiwan was only four years behind the United States in transistor technology.
After the formation of Taiwan's ITRI (Industrial Technology Research Institute) in 1973, the technological breakthroughs for Taiwan came non-stop.
ITRI developed the technology for industry-after-industry for Taiwan. ITRI's accomplishments include:
semiconductor fabrication
IBM-compatible PC
carbon fiber bicycle frames
composite materials for tennis rackets, golf clubs, etc.
notebook computers
LCD displays
CD-ROM drives
LED
Inkjet printers
Linear motor machine tool
USB 3.0 thin memory card
solar panels
advanced "controller software" for five-axis CNC machine tools
From 1976-2017, Taiwan's technology kept migrating across the strait and into mainland China. This means mainland China's civilian industrial technological heritage is the same as Taiwan's.
Through its proxy Taiwan, China could consider its first machine tool as being built in 1954.
Through its proxy Taiwan, China could trace its first experience with transistors to 1964.
Every technological breakthrough made by Taiwan's ITRI was also a breakthrough for Mainland China.
This means Mainland China's civilian technological roots go back 60 years in machine tools, 50 years in transistors, and decades in all other technologies. Mainland China was right there with its proxy Taiwan as ITRI produced technological breakthrough after breakthrough.
Taiwan provided everything that China needed. Taiwan provided the technology, patents, capital, management know-how, and worldwide customers.
If you believe the theory of China-and-Taiwan as an economic whole then China's economic rise looks inevitable. For example, let's say Deng Xiaoping didn't open up China in 1976.
Let's pretend Xi Jinping opened up China today. What happens? The same Rise of China would happen after a few decades. Taiwanese money and technology would flow into China. Mainland China would become increasingly rich and more sophisticated in technology.
In my view, it didn't really matter when Mainland China wanted to open up its economy to foreign investment. Taiwanese companies were always waiting to modernize China's economy.
I think China's Economic Rise was inevitable.
If China's economic rise can be attributed to its shared technological heritage with Taiwan then it means no other country can follow China's economic development. Taiwan has shown no inclination to share its technology with any other country besides mainland China. Any developing country today that wants to compete in a high-tech industry will be decades behind Taiwan/China technologically.
There is a mountain of Taiwanese and mainland Chinese patents in everything from CNC machine tools to LCD displays. I don't see how any new country can effectively compete against Taiwan/China in existing high-tech products. Mainland China's annual $500 billion trade surplus and Taiwan's $50 billion annual trade surplus look safe from upstart competition. The last 15 years have shown there is no serious competition for China/Taiwan in international exports of manufactured goods.
.
