IB History China's Emergence as an Economic Power Including Joining the WTO Notes

China's Emergence as an Economic Power: WTO Accession and Manufacturing Growth

1. The 1997 Asian financial crisis spared China direct currency collapse, since the renminbi was not freely convertible, but it exposed weaknesses in China's own banking and state-enterprise sectors and encouraged more decisive restructuring.
2. Premier Zhu Rongji, appointed in 1998, led an aggressive reform of loss-making state-owned enterprises, closing, merging or reorganising thousands of firms and cutting tens of millions of jobs from state employment between the late 1990s and early 2000s.
3. China's state banks had accumulated large volumes of non-performing loans extended to unprofitable state enterprises. Beijing recapitalised the major banks and transferred bad debts to newly created asset-management companies to stabilise the financial system before WTO entry.
4. China pursued WTO membership through prolonged negotiations lasting some 15 years, requiring commitments to cut tariffs, open service sectors, and strengthen intellectual property protection. China formally joined the World Trade Organization in December 2001.
5. WTO accession accelerated China's transformation into a global manufacturing centre, moving from low-cost, labour-intensive goods toward more advanced electronics and machinery production over the following decade, as multinational firms relocated supply chains to Chinese factories.

1. Rapid industrial growth drew tens of millions of rural migrants into expanding coastal cities, powering both manufacturing output and a wave of urban construction, though many migrants lacked full access to urban social services under the hukou system.
2. Persistent trade surpluses and large capital inflows produced vast foreign exchange reserves, which exceeded $3 trillion by 2011, giving Beijing significant financial leverage internationally and making China one of the largest holders of US government debt.
3. When the 2008 global financial crisis threatened Chinese exports and employment, the government launched a stimulus package worth roughly RMB 4 trillion (about $586 billion), directed mainly at infrastructure and construction, which helped the Chinese economy recover faster than most Western economies.
4. Investment in universities, research institutions and technology rose steadily through the 2000s as the government sought to move the economy up the value chain from low-cost assembly toward higher-value and innovation-driven production.
5. Rapid growth lifted hundreds of millions of people out of extreme poverty between 1998 and 2012, even as regional and rural-urban inequality widened. By 2010, China had overtaken Japan to become the world's second-largest economy by nominal GDP, a position it still held by 2012.