Back To CourseAP World History: Exam Prep
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Chris has an M.A. in history and taught university and high school history.
What is the first country that comes to mind when you think of an economic superpower? Perhaps you think of your own country, the United States, or perhaps you think of the banking centers of London in England, or tiny but rich states in Europe like Switzerland or the Netherlands. Regardless of what you think of, chances are your first choice is not India or China. That, however, might be the case if I put that question to your grandchildren! In this lesson, we'll explore the relatively recent rise of both China and India to international prominence.
For most of the 20th century, China remained a closed-off society of over one billion people, with even basic information about the country's economy and people closely guarded by the ruling Chinese Communist Party, which took power in the 1940s under the legendary Mao Zedong. Mao ruled over the party and China until his death in 1976. The oppressive governance did not end with Mao's death; the 1989 Tiananmen Square student protests for democracy, for example, were violently suppressed by the Chinese army and hundreds were injured or killed in the melee.
However, in the 1990s, under Jiang Zemin, the Chinese government eased some economic restrictions, which allowed Chinese companies, especially those operating within designated 'special economic zones,' to do more trade with foreign nations. Though seen as a positive sign by many Western, capitalist countries who hoped for a complete opening of the Chinese market, the development created huge gaps in wealth between the more urban, coastal areas of China and the still poor, rural interior.
In the first decade of the 21st century, Hu Jintao continued his predecessor's policy of increasing China's openness to foreign trade, as well as increasing China's stature in the global community. Since the turn of the century, China has experienced an unprecedented period of sustained economic growth, with the Chinese government reporting remarkable economic expansion numbers each year, usually somewhere between 8-10%.
Though these numbers have tapered slightly since 2010, the results are real; Chinese society has transformed rapidly. While less than 10% of Chinese households were considered 'middle-class' at 2000, by 2006 that number had risen to 39%. Some estimates claim that number will rise to over 60% by 2016. These numbers gain even greater importance when you consider the scope of China. With more than 1.3 billion citizens, even 2006's numbers place more people in the Chinese middle-class than the entire population of the United States!
The rise of the Chinese middle-class has transformed China and the global economy with it. This burgeoning middle class has the same voracious appetite for consumer goods and luxury items that middle-class consumers had in the United States in the 20th century. For example, China is now widely considered the largest automotive market in the world, and automotive manufacturers from around the world are anxious to be allowed into China's still tightly-controlled economy.
In addition to China's newfound economic prowess, the Chinese government has increased their interest in maintaining and expanding their regional and global influence. Though publicly China remains committed to peaceful development, in practice, the Chinese have shown no fear in using military force and little respect for disputed territory. For example, in summer 2014, the Chinese placed an oil platform in the South China Sea, waters that both China and Vietnam claimed. At the same time, China held live-fire war games in the East China Sea, dangerously close to islands claimed by both Japan and China. Other global political realities, such as the United States' close alliance with Japan and Korea, China's building of a navy, and the U.S. government's pledge to defend the sovereignty of Taiwan, which China claims is part of China, further complicate matters. The direction of China's economy, as well as its regional and global foreign policy, will likely affect global events in the remainder of the 21st century.
To the southwest of China is the 21st century's other great economic success story: India. India experienced a different path to economic success than China, though its results are similar. First of all, India does not possess the ruling communist party in control of all government affairs that China does. Instead, India is a post-colonial democracy only freed from the shackles of British colonialism in 1947. For the first few decades of Indian independence, the country had a socialist-leaning government that also tended to be more corrupt than not.
However, since 1980, India's government has increasingly opened its cities and ports to global free trade with astonishing results. With its low minimum wage and few labor restrictions, foreign countries flocked to India in the late 20th and early 21st centuries, setting up manufacturing operations and plants that were too expensive to be conducted in Western countries where expected wages were higher. Regardless of the ethical merits of this trend, the results for the Indian economy and Indians in general were overwhelmingly positive. From 1980 to 2002, the country's economy grew an average of 6% a year, and since then the economy has averaged 7.5% annual growth.
The result has been an additional 250 million people added to India's middle class, roughly making up 20% of the nation's 1.27 billion citizens. India, like China, has become an increasingly attractive market to the producers of consumer goods. In addition, while China's economic numbers have tapered since 2010, India's have remained strong. Many experts believe the growth of Chinese wages and labor protections relative to India's have made India a more attractive option for manufacturers looking to save money.
In early 2014, India overtook Japan to become the third-largest economy in the world. This status not only has economic ramifications for the developing nation, but political ones as well. Commentators and analysts in the United States have called for better diplomatic relations with India in opposition to the other regional power, China. India, meanwhile, has its own problems with China, who share a border dispute in the Himalayas, which led to a war in the mid-20th century. However, recent relations between the two countries have been good, as both countries look to maintain the growth, which has made them players on the global stage.
Throughout most of the 20th century, economic growth was centered in the West: on Wall Street in America and in London, Switzerland, and Western Europe. The 21st century, however, will likely be the century of Asia's economic takeoff. Both countries detailed in this lesson, China and India, are well on their way. Chinese economic growth has taken off as the central government has eased restrictions since the 1990s, allowing Chinese companies greater ability to trade and foreign companies access to the Chinese market.
Over half of the Chinese population - a population which until recently was overwhelmingly poor - may soon be considered middle class. Though India's gains have been slower and more modest, it is poised to take over from China as the world's center for manufacturing, bringing jobs to millions of Indians and lifting them out of poverty. The steps these developing economic powers take in the 21st century, and the impact their burgeoning middle classes have on the global economy, may very well be the economic story of the 21st century.
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Back To CourseAP World History: Exam Prep
31 chapters | 283 lessons | 29 flashcard sets