How made in China went global The Global Story

Was Made in China actually made in America? And did the US help China to become its main rival? Today on the show, we look at the origins and evolution of Made in China because it wasn't actually inevitable. From the BBC, I'm Tristan Redmond in London. And I'm Asma Khalid in Washington DC. And welcome to The Global Story on YouTube. So Tristan, it is day four of our big series about the United States and the world at 250. And, you know, all this week, we have been taking a step back from our daily newsy routine to reflect on some bigger themes, reflect on America as a place and as an idea. Yeah, so far this week, we've been mostly thinking about how the United States came to become the power that it is now. And in today's episode, we're going to be thinking about what comes next and the challenger waiting in the wings, and that's China. And, you know, when I think about China, I will say I don't think it can be overstated just how much economically the country has transformed over the last five or six decades. You think of China going back to the 1950s and 1960s, and many folks didn't really see it as an economic player. You look at it now, and it is undoubtedly a global economic powerhouse. The figure that we often hear from the World Bank of 800 million Chinese people lifted out of poverty in the last 40 years, whichever way you slice it, that is an impressive number. And, you know, you could make a case that it is one of the most successful economic success stories in human history. And, Tristan, you've been seeing signs of that economic success story in parts of China for the last several years. I went to China some years back, and I remember going to Shenzhen, and I went to a shopping mall, and you saw so many young people who were working in the factories, and then they are out in the evenings eating, shopping at these huge shopping malls. And that was something really new. The local journalist I was working with pointed it out to me and said, this is something that we didn't used to see. These are all these young people who've come from, in some cases, villages, different parts of China, who've come to work in these factories and have money to spend. It's a Chinese middle class. It is a Chinese middle class. The creation of that Chinese middle class is something we're going to be talking about today. Where did it come from? The answer is partly through extraordinarily successful reforms instituted by the Chinese Communist Party. But arguably, the United States played a role in it too. The thinking was, if we help China to become more like us economically, then maybe China will become more like us politically too. But the question is now, did that process backfire? And that's what we're going to be getting into today. Right. I mean, I suppose if you put it a tad differently, the question is, how big of a role did the United States actually play in helping create its own economic rival? I mean, to some degree, was made in China, made in America. And to get into all of that today, we're going to be joined by Elizabeth Ingleson. Elizabeth is an academic at the London School of Economics, and she's the author of the book, Made in China, When US-China Interests Converged to Transform Global Trade. Elizabeth told us a story about a very traditionally American set of products that was being mass manufactured in China, and then sold back to Americans by a very big and famous American personality. It's summer, 1976, and Don King, a major promoter in the United States. A boxing promoter. Boxing promoter, that's right. The sort of Muhammad Ali, George Foreman, Rumble in the Jungle. The deal had been brokered by an unknown black hustler called Don King. Weren't you going to send me those pictures? I did. You did, didn't you? Ali wanted to achieve something, and I gave him the opportunity. He was the biggest guy in the world, but he couldn't get George Foreman. I got George Foreman. He is having a party in his Manhattan apartment on the 76th floor to celebrate his new line of goods. He's moved from boxing to trade and has created a company that is importing tennis balls, basketballs, sporting goods from China into the United States. He names this new company the Don King Friendship Sports Clothes and Goods Corporation. Does it roll off your tongue? Does not roll off your tongue, no. But what he was very good at doing, perhaps not so good at naming his new trade company, but what he was very good at doing was promoting these new balls. So he had tennis balls, basketballs, all bouncing around in his Manhattan home. Glasses of champagne are circulating, so too are balls being thrown across the room. And he, at one point, hosts this moment of collaboration and welcomes the guests and really speaks of what he sees these balls as providing. And it was reported in newspapers afterwards that he described these Chinese hockey mitts and basketballs as having, quote, mystic powers, he said. Mystic powers? Yeah, yeah. Because they were made in China? Because they were made in China. So, you know, he said that, you know, these basketballs and hockey mitts would mean that players would gain more baskets and more scores. But what was, I think, most interesting was that these balls, they were just regular basketballs, right? And what made them significant was not at all that they had mystic powers, but instead that they were made cheaply in China. And that was new in the 1970s? It was new that they were coming from China, right? So... Did they have mystic powers for Don King's bank account? You know what? They did. And this is part of what was happening was the selling of goods, regular goods, was becoming more and more appealing precisely because of the Chinese origins. And the reason for that was that for over 20 years, the United States and China had no trade at all. This is in the Cold War era. And China, even more than the Soviet Union, was cut off from the United States economically, diplomatically, culturally, socially. It was not dissimilar to the dynamics between the United States and Cuba or the United States and North Korea today. Almost no contact at all. So in the 70s, one of the reasons it's so exciting is that you're getting contact and trade and engagement with a country that had been so cut off from the United States for so long. And Elizabeth, these days when we think about products being made in China, it seems given, given global capitalism at this point, you mentioned that in the 1970s, the idea of sports equipment being made in China was very novel. Can you tell us of the moment when China becomes a real trading partner of the United States? When its market became open to Americans, and when Americans started importing a whole lot more from China? I think it's really important to not take for granted that today, anything you can imagine has the label made in China on it, right? What we're talking about is the world's largest communist nation is at the beating heart of the capitalist system. It's at the beating heart of trade and manufacturing and labor today. And so your question is, how did we get there? The 1950s and 60s, this is the Mao era, the Chinese revolution, the communist revolution. And what Mao was doing in the 50s and 60s was really experimenting with how to maintain a communist revolution and how to have that revolution be something that is sustainable globally. Mao was very intent on a very different form of political economy, and a political economy and a world order that was not at all like what was happening in the United States in the capitalist order. So the story that is, I think, so important to understanding these dynamics is a story of Nixon and Mao meeting in 1972. There is no reason for us to be enemies. Neither of us seeks the territory of the other. Neither of us seeks domination over the other. Neither of us seeks to stretch out our hands and rule the world. President Nixon was to remark later in the day that he had never heard American music played better in a foreign land than he had on his first day in the People's Republic of China. China inviting the President of the United States, the key country that China's revolution had been in opposition to for the last 20 years. But what's really important is that this isn't only a story of geopolitical shifts. It's also a story in which the political economy within China and experimentations of development within China begin to turn to the United States and turn to the capitalist order as a way for China to continue its efforts at finding a way to modernize and to develop. And so the United States becomes part of an attempt at Chinese pragmatists really trying to work out how to feed its people and its economy. And the United States begins to become part of that picture. As Peking welcomes its famous guest, who in the past has so often been a target of all its fears and the roused antipathies. What's really, I think, a sort of less known part of this story and a less known part of the Nixon shock is the second Nixon shock that happens in the summer. So it's in 1971 that Nixon announces, Hey, everyone, I'm going to go to China. So it's that shock, the China shock, it's called. But a month later, he announced that the United States was ending the dollar-gold convertibility and with it moving away from the bread and woods system of fixed exchange rate. Why that's so important and particularly important to the opening to China is that it allowed for money and foreign exchange to move faster and more freely across borders. The capacity to set up manufacturing facilities and other spaces overseas is even easier. OK, Elizabeth, if you could explain, though, if I were opening a basketball plant in China, why is Don King and why am I and why are other American business people suddenly rushing to invest in manufacturing in China? Like, what's the what's the thing that sparks us to do that? OK, so first and foremost, you and Don King might want to do that. But you and Don King face a really significant challenge, and that is that China didn't let you do it. China in this period wasn't allowing you to set up your own factories. What was happening instead was China was saying, we can make them for you in our factories and we can sell them to you. When Don King is buying his basketballs and now saying, no, you can't set up shop. But why this is significant is that the Don Kings of the world and others who are trying to sort of are so excited about trading with China are doing so even though they're not allowed to set up factories there because what they're seeing is a promise. And this promise is it's a very different kind of promise to what American business people and Europeans and others had seen for centuries, because for centuries, the promise in China had been a place to absorb other countries' goods. For a very long time, centuries, it was this idea of we can sell to China. The fundamental shift that was happening in the 1970s was a vision that said we can buy from China, we can import from China, and we can do so because what we're seeing in China is cheap labor. Because within China during the Mao era, those within the Politburo who had a more sort of pragmatic vision of China's modernization were saying, we can harness our large population in order to provide this cheap labor. So there's a flip from China as market to China as manufacturing base. What was the very moment of that flip? You know, there was no singular moment. This is not a story of a singular moment at all. It's a story instead of slow working through what China's place in the world will be, a slow working through of what will American business people be able to achieve in China. It was very, very uncertain. It's really important to emphasize that Don King was able to make a really good profit from this, largely because he... Thank goodness for that, right? Largely because he was a very, very good marketer. But a huge number of the American business people who traded with China in the 1970s lost a lot of money, but they kept going. So some of the companies that I look at include, you know, Coca-Cola, for example. They were just buying things from China. They didn't sell anything. They weren't able to open up their bottling plants until the 80s. Bank of America was buying carpets. And what were they doing? Carpets. Yeah. So they lined their carpets to show to the Chinese traders that they were interested, to demonstrate their commitment. And so they were willing to do this because they saw... But what did Bank of America want out of China? Yeah. It wanted to be able to open up banking facilities eventually, right? So they had this real vision, long-term vision, but it was very uncertain. Never mind that. What did they do with the carpets? They lined them in Chicago. So the Chicago branches... I have the documents of this. The Chicago branches had these Chinese carpets. And even the basketballs that Don King was selling. I mean, he was pitching them as being exotic with these mystic powers. But somewhere along the line, Made in China, in the minds of many Americans, did not have that exotic appeal. I mean, as I recall it growing up as a kid of the 90s in the U.S., Made in China, to put it bluntly, was associated with products that were at times thought to be shoddy, cheap. People would check sometimes the labels to see, in fact, if it was made in China and not want to purchase it. When did that shift begin that something made in China was thought to be of less quality? One of the reasons that this moment of excitement is so important in the 1970s is that it's facilitating and normalizing the idea that things would have Made in China on them. So this is a cultural shift, accepting China not as a communist threat, not as red China, but as an unthreatening trading partner. And so this accelerates from the 1980s and into the 1990s. I, too, remember and grew up with sort of all of the sort of fearmongering on things made in China. Was it fearmongering, Elizabeth? I mean, are there examples of the reputation? Was it earned or not earned? No, when I say fearmongering, I should be more clear. What I mean is it would often be tied in with this idea of China as a threat. But no, China was using sweatshop labour. And in the 1990s, there was this real movement led by Chinese activists, one man in particular, Harry Wu, who really shone a spotlight on gulags within China and really tried to highlight the exploited labour underpinning so many things that were labelled made in China. So, Elizabeth, the made in China label on a product, its significance is evolving in the period of the 80s and 90s. But there is one company that in the popular imagination now is really inextricably linked to manufacturing in China, and that is Apple. What's the role of Apple in all of this? And how has Apple changed the way that made in China has been perceived? I think Apple is a really, really important shift in the story that I'm telling. The story that I'm telling is this period in the 1970s into the 80s of shifting manufacturing, right? What Apple represents is an extreme version of the shifts that were starting to happen in this post-Brennan Woods era, whereby something that might be considered an American company like Apple is so reliant, actually, on countries around the world, particularly China. In a previous episode of The Global Story, we specifically looked at Apple and its reliance on manufacturing in China. And we learned that Apple had sent thousands of engineers over the years to help train factory workers in Shenzhen. And that, you could argue, was a way that fundamentally changed Apple and its production cycle, but it also presumably changed the local economy of China. Have you seen evidence over the years of how it shaped and has reshaped the local Chinese economy? I mean, I think the story of how Apple has built its infrastructure within China is such an important window into a large number of different dynamics that have been at play in China's capacity to build such a strong economy and build up a middle class. So part of it, as you've been saying, did rely on the training of Chinese people by not just American engineers and others, but Japanese and a whole range of experts from around the world. So China did benefit from technology transfer and a whole range of different ways in which expertise was provided. Really, it was going on since the 1950s itself. The Soviet Union sent experts. Then in the 1970s, America sent experts. Boeing experts came to China to help with the aeroplanes. In the 1980s and 90s, as you say, you start to see technicians, including those from Apple. So this is a really long story. And what I think is so important is that as China did engage with and learn from and collaborate with foreign engineers, it was able to build not just a workforce providing cheap labour, but you also have a Chinese economy that has become so prosperous that there is a booming middle class that is also now starting to drive consumption. And so China by the early 21st century is not only a source of cheap labour, but it also has a site of very significant numbers of middle class consumers. Well, Elizabeth, gone are the days in our story when, as Asma was describing, the Made in China label was deemed to be a kind of marker of inferior quality goods. China is making great stuff at this point in our story. So much so that in the United States, they're even being considered a threat to national security in some cases. How did that happen? How did they get so much more sophisticated in their manufacturing capacity? You know, I think in the 90s and into the 2000s was this idea that Chinese goods were cheaply made, partly because this was a period of cheap consumption and cutting corners. And what has happened more recently is China itself has shifted the kinds of products it wants to make. Xi Jinping in particular, since 2015, has implemented his Made in China 2025 vision, in which Xi himself sought to shift manufacturing and industrial policy within China to begin to move towards high tech and high value manufacturing. So at the moment, what Xi in particular is cultivating is a concept that he calls dual circulation in English. This idea that you would have a fairly self-reliant economy within China itself, one that did not need or does not need or rely upon foreign inputs, but an additional layer that does sell to Europe, and if they can to the United States, depending on where. And so that strategy has been very deliberate. But an additional dynamic coming from Washington is to understand too that there is a geopolitical layer on top here, right? There's a geopolitical concern that change is happening in China's economy. The change is happening with what Xi Jinping is doing. This dual circulation strategy itself represent a real threat to the United States' own capacity to maintain economic and geopolitical hegemony. China now has a huge trade deficit in its favour with the United States. It exports a lot more to the United States than the other way around. And as we all know, that was a central feature of Donald Trump's successful campaigns in 2016 and in 2024. So we were interested in the idea that it was a through line from Chinese economic success to where we are in the world right now today. And in that spirit, I wonder if you'll indulge us if we present you with a counterfactual. Yeah, great, great. Imagine Richard Nixon, right, had not gone to China in 1972 and China had not then opened up and modernised economically. Would US steel mills still be pumping out steel? Would Detroit car factories still be manufacturing cars in huge quantities? Can I counterfactual your counterfactual? Please, love it. Well, please. I would say that an even more significant counterfactual is not whether or not Nixon went to China, met with Mao, ended the 20-year isolation, but rather that Nixon does not implement the financialisation policies, the freeing up of capital to move across borders more easily, to set up manufacturing facilities abroad more easily, to have containerised shipping. If we didn't have the facilitation of those processes and there was significant congressional resistance to these changes happening, particularly in the 1970s, if that hadn't happened, if those structural shifts hadn't happened, I think we would have a very different world. Well, Elizabeth, on that note, thank you very much for joining us. Always a pleasure. Thank you both. That's it for The Global Story on YouTube. Thanks for spending some time with us. And if you appreciated our show today, then I've got to mention that The Global Story is also available as an audio podcast. That's right. You can find us every weekday on BBC.com or wherever you listen.