China's rise since 2001: From gold mine to competitor

Human-like robots recently competed in Beijing. The fastest, built by a Chinese company, even beat the human 100-meter world record in the race. The machine was an incredible 0.19 seconds faster than the Jamaican sprinter Usain Bolt. The new humanoid record and China's dominance of the World Robot Championship were a propaganda success. Media around the world reported on the racing robots “Made in China”.

The Chinese government had previously declared the development of embodied artificial intelligence (AI) as “new productive forces” to be an industry of the future. With government funding, technological dependencies on foreign countries are now being reduced and hardware and AI startups are being provided with stock market capital. Conversely, at the end of July, the US government banned the import of humanoid robots from China - out of concern for national security.

The example of robotics shows that 25 years after joining the World Trade Organization (WTO), the People's Republic is no longer just the “workshop of the world” flooding the globe with cheap goods. In fact, China is now also competing with western industrialized countries in high-tech.

Jacob Gunter heads the economic and industrial program at the Berlin China Institute Merics. Gunter says: “A common misconception in industrialized countries in 2001 was that China could open up but could never really become innovative as long as it was a one-party state.” That is why people in the West always believed that they would remain at the forefront of research. From today's perspective, a fatal mistake.

China has built up large research and development capabilities with the aim of technological leadership. “Joining the WTO was extremely important for China,” says Gunter. It took place a few months after Beijing was awarded the 2008 Olympic Games and ensured comprehensive tariff cuts and thus China's unhindered access to export markets. “That triggered a boom,” says Gunter. China's nominal gross domestic product (GDP) grew from $1.355 trillion in 2001 to $19.498 trillion in 2025, nearly a fifteen-fold increase. In 2010, China became the world's second largest economy.

“Western companies that invested in China also benefited,” says Gunter. Particularly German ones, who supplied complementary industrial products such as machines. “Consumers in industrialized countries also benefited from cheaper consumer goods from China. This kept inflation low there.”

In the first years after joining the WTO, China was “a gold mine” for German industry, says an employee of a German business organization who cannot be named. “We had good offers and benefited disproportionately from the China boom.” But the biggest beneficiary was China itself: “The general population there definitely benefited.” There are still precarious working conditions today.

But 600 million people have been lifted out of poverty. “Of course the party also benefited from this,” says the man who has been working on China since the 1990s and has since organized and supported dozens of exchange programs. This also resulted in a layer of super-rich people, and party officials made a lot of money from the sale of land use rights.

WTO accession was part of a development path for a more liberal, modern country. “They call us dreamers, but in 2001 there was an option to develop China into a country with a more market economy, more citizen participation and a move towards a system where individual wealth and individual rights were given greater importance.”

The economic expert believed at the time that China would not be able to escape the pressure to liberalize in the long term. “But then Xi Jinping turned his back on this path and set China on a path that resulted in the primacy of strengthening the power of the Communist Party, reversing market economic development and strengthening state-owned enterprises.”

Economic reformer and Prime Minister Zhu Rongji, who sealed WTO accession after 15 years of negotiations, was no longer in office when Xi Jinping became party leader in 2012 and head of state in 2013. Xi centralized power and became more powerful than any Chinese leader since Mao Zedong. The “Chinese Dream” proclaimed by Xi initially appeared to be a copy of the “American Dream.” But Xi's party Chinese dream does not mean unlimited individual freedoms, but rather China's return to national greatness and global power. The population has to submit to this, while under the leadership of the party the nation should become the “Middle Kingdom” again.

In addition to the “New Silk Road” project, in which China binds other countries to itself through massive infrastructure investments and loans, this is also reflected in the “Made in China 2025” plan adopted in 2015. The goal is a leading high-tech nation that takes the lead in future technologies. The focus is on information technology, robotics, electromobility, mechanical engineering, aerospace and railway technology, medicine and the pharmaceutical industry.

The strongly dominant role of state-owned companies is central. The economic expert criticizes that China has a specific combination of party, state and economy that allows Chinese companies to operate on the market in the long term without having to make profits. “We were not prepared for China, a partner in our WTO system, whose basic system does not fit our rules at all.” Today, WTO accession can therefore also be read as: “China uses the advantages of integration into the global economy, but undermines the international regulations through its party-controlled state economy.”

In 2019, the Federation of German Industries (BDI) declared the “change through trade” concept to have failed in a China policy paper. Instead, “system competition emerges.” There are complaints about market distortions and isolation caused by government intervention, striving for technological dominance, unequal treatment of foreign companies and growing political control. Many of these problems were not new. But as long as the industrial market grew by 20 percent per year, they were manageable; the growth overcompensated for a long time.

But China itself became more and more innovative and competitive. First it became a competitor in third markets, and later also in mechanical engineering, industrial automation and cars, i.e. German domains. “Of course we also contributed to China becoming more competitive,” says the man from the economic organization. The West's idea was: the higher markets climb on the high-technology ladder, the more opportunities there are for German industry. “But that didn’t work in China.”

After joining the WTO, the US economy was the first to suffer from Chinese cheap products displacing US manufacturers on the domestic market, meaning Walmart's goods became more and more Chinese. This “China shock 1.0” cost the USA many jobs, especially in the low-wage sector, gave the West negative experiences of globalization and may have contributed to Donald Trump’s first election victory. In Great Britain also about Brexit. At this point in time, Germany was still doing good business with high-quality industrial goods that China needed for modernization.

This text first appeared in wochentaz, our weekly newspaper from the left!

Every week, wochentaz is about the world as it is – and as it could be. A left-wing weekly newspaper with a voice, attitude and the special taz view of the world. New every Saturday at the kiosk and of course by subscription.

But from around 2020, the People's Republic challenged German industry with ever better and cheaper products. Since China's population does not consume enough to utilize the domestic industry and its overcapacity, China exports as much as possible - so the West accuses - at artificially low prices. According to the Federal Employment Agency, this “China Shock 2.0” contributed to the loss of 177,700 manufacturing jobs in Germany in 2025. That's almost 15,000 jobs - which are still being lost every month. An OECD study on subsidies states: “Between 2005 and 2024, depending on the region, Chinese companies received, on average, three to eight times more government support than companies based in OECD countries.” At the same time, Beijing does not shy away from using its own monopoly position in rare earths, for example, as leverage to block retaliatory measures.

According to Jacob Gunter of the Merics Institute, China has followed most WTO rules in letter but not in spirit. “It was certainly never a priority for Xi.” The WTO, in which the export nation Germany has a great interest and under whose rules around 60 percent of world trade still takes place, is also being torpedoed by the Trump administration, for example by blackmailing trading partners with tariff threats.

Because of China's new strength, Trump is also shying away from an open trade and customs conflict with Beijing. China's previous economic model, which is based on high growth rates, land sales, real estate and comprehensive infrastructure expansion, has become obsolete. The change to more sustainable and more consumption- and domestic market-oriented growth is still pending.

So far, even sprinting robots have not changed this. After just three days in Beijing, another humanoid robot from China beat the new sprint record by another 0.53 seconds. What the humanoid sprinters have in common is that after reaching the finish they crash into protective mats and fall over. Because they can't brake yet. So there is still a lot to do for China's engineers and economic politicians.