American and Chinese Flags

Globalization, China, and the United States

Feb 28, 2022 | Economics, International


Curbing China’s growing global influence is one of the most pressing challenges the United States currently faces. While several factors have contributed to China’s ascent, one of the most significant influences has been the evolving dimensions of globalization. Over the last two decades, as the world has become exponentially more globalized, China has begun to challenge the U.S. for the global balance of power.

Manfred B. Steger defines globalization as “the expansion and intensification of social relations and consciousness across world-time and world-space.” The evolution of economic, political, and financial globalization has all played significant roles in China’s global ascent. These factors have manifested themselves through the rise and fall of various global political ideologies, changes in U.S. international trade policy, and proactive and unprecedented Chinese foreign investment.

Economic, Political, and Financial Globalization

In 1978, China initiated its “reform and opening up” program, which is often cited as the initial turning point for the previously underdeveloped Chinese economy. The program was a deliberate effort by the Chinese Communist Party (CCP) to increase reliance on market forces and further integrate into the global economy. By doing so, China kick-started rapid economic growth. Two decades later, the normalization of trade relations between the U.S. and China in 2000 and China’s subsequent accession to the World Trade Organization (WTO) in 2001 marked two significant international milestones in China’s global ascent. While the WTO’s primary focus is trade, it is as much a political entity as an economic one. Joining the WTO accelerated China’s economic growth and gave credence to its international standing as a rising economic powerhouse. From both a domestic and international standpoint, China’s benefits from economic globalization are clear.

Using the World Bank’s $1.90 poverty line metric, China has seen a dramatic reduction in the number of its citizens who live in poverty since the 1980s. United Nations and World Bank data show that the share of China’s population living below the $1.90 poverty line has dropped from 88% in 1981 to 1.85% in 2013. In addition, since 1992, China’s trade balance has dramatically shifted alongside its global status. In 1978, China accounted for only 0.75% of total global exports, and the U.S. was the number one exporter in the world. As of 2019, China accounted for 13.45% of global exports, more than any other country. Additionally, China overtook the U.S. as the number one manufacturing country in 2011.

Richard Nephew writes, “it is much easier to use power when you have power, and more comfortable to do so when the risks and perceived consequences of blowback are small.” Rapid development into an export-first economy provided China the political power to manipulate and undervalue its currency, in turn maximizing export profits. China has historically kept its currency undervalued by approximately 30%, which has boosted its exports by making goods cheaper abroad. Since the Chinese economy is extremely reliant on exports, devaluing its currency allows China to benefit domestically at the expense of its international trading partners. This move has, unfairly, further increased China’s sphere of influence across the globe.

By joining the WTO and opening itself up to international collaboration and trade, the U.S. believed that China would shift away from authoritarianism and join the rest of the developed world as a democracy. This belief was notably espoused in 2000 by President Bill Clinton, who stated, “By joining the WTO, China is not simply agreeing to import more of our products; it is agreeing to import one of democracy’s most cherished values: economic freedom. The more China liberalizes its economy, the more fully it will liberate the potential of its people — their initiative, their imagination, their remarkable spirit of enterprise.” The idea that free trade leads to democracy remained the consensus in Washington until recently. Today, it is clear that China wielded the benefits reaped from globalization to strengthen the Chinese Communist Party’s domestic power and throw around its newfound weight on the international stage.

China’s global influence has manifested itself in several ways, most notably through the recent “Belt and Road Initiative” (BRI). The project was announced in 2013 and, as described by the Center for Strategic and International Studies, “aims to strengthen China’s connectivity with the world.” China has already pledged to invest $1 trillion into the BRI. Countries that have signed on to the BRI account for a total population of 4.6 billion, or 61% of the world’s population, with a total GDP output of $29 trillion. By doing so, China is engaging in “debt-trap diplomacy,” a political strategy to increase its sphere of influence across the globe. By pouring large amounts of money into global infrastructure projects, the BRI allows China to keep developing countries in its financial and political debt for decades to come.

How China’s Ascent Affects the United States

China’s rise has positioned it to challenge the U.S. for the global balance of power. In hindsight, by publicly supporting Chinese accession to the WTO and legitimizing its international standing, the U.S. worked against its own interests. The U.S. initially hoped to court China through global trade liberalization, spark a shift from centralized government towards democracy, and profit economically from Chinese accession. Unfortunately for the U.S., China viewed its invitation to the international stage as an opportunity to seize economic influence and increase the power of its authoritarian government. Greater economic and political influence allowed China to expand its domestic political control, continue engaging in human rights violations, and wield its newfound power as a major player on the global stage.

Among the benefits of Chinese accession has been cheaper goods imported from China. Cheap Chinese imports have been positive for American consumers, but they come at a substantial cost. The U.S. manufacturing industry has taken an immense hit as jobs have moved overseas and vital supply chains have been outsourced. One study estimates that the loss of 1 to 2 million U.S. manufacturing jobs from 1999 to 2011 can be attributed to China. Despite its upside, globalization has manifested itself in two notably negative ways for the United States: America’s domestic manufacturing disappeared, and Chinese manufacturing became the heart and soul of China’s export-first economy.

Historical and recent changes to international trade policy have contributed to the evolving relationship between the U.S. and China. While the invitation of China to the WTO was a significant change in policy towards an authoritarian regime, policy attitudes between U.S. administrations regarding the Trans-Pacific Partnership (TPP) signaled another round of profound shifts in the dynamic between the U.S. and China. Initially, the TPP was widely viewed as a way for the U.S. to exercise its influence in East Asia and counter China’s growing influence. Ultimately, the U.S. withdrew from the TPP over concerns about losing additional domestic production capability to overseas jobs. While stronger domestic manufacturing is an important tool that can counter China’s export-first mentality, the withdrawal from the TPP conceded any regional political clout the U.S. hoped to maintain. Seeing an opening, China jumped at the opportunity by negotiating a free-trade deal known as the Regional Comprehensive Economic Partnership. This deal signals an attempt by China to cement regional influence and establish itself as the largest economic player in the Asia-Pacific region, which will further change the dynamics of the global balance of power.

By transitioning from a centrally planned economy to a primarily export-first economy, China has used globalization to shift the balance of power away from the U.S. To remain the dominant global superpower, the United States must balance protectionism with international cooperation to strengthen domestic manufacturing, secure key regional partnerships, and counter China’s growing political and economic influence.

Featured Image by richie c is licensed under CC BY-NC-SA 2.0.