Jiang Zemin - the man who made the Middle Kingdom part of the World

China 中国 – the Middle Kingdom has for most of its history been exactly that – a middle kingdom that decided the terms of engagement between itself and the rest of the world. Other states were treated as tributary states to China. China had never of its own will, given up that right and privilege, until 2001...

It is in this light we should understand the bravery of Jiang Zemin and of his premier Zhu Rongji, who against much resistance pushed through China becoming WTO member in 2001.

This was a momentous decision for China, and for the world. For China it essentially meant that the Middle Kingdom now accepted - out of its free will - to let the fate of the country be decided by external forces and that it could not anymore dictate the terms and conditions of its relationship with other countries. This was a break with over 2000 years of history!

For the world it meant that 1/5 of the world population now would be integrated into the global economy. Before 2001 the world economy was basically an affair of Europe, US, Japan, the so called four Asian Tigers and a few other NIC countries with a total population of less than a billion people. On December 11, 2001, 1,3 billion people almost overnight joined the game.

At the time China only made up 4,25% of global GDP and its share of global trade was a mere 3%. No one could probably imagine how China in only 20 years of WTO membership would transform the global economy and itself. The world now entered, what can probably be described as, the most transforming era of globalization in human history.

Or, maybe this is exactly what Jiang Zemin and Zhu Rongji imagined! These two men knew each other from Shanghai when Jiang was party secretary and Zhu was mayor. After Jiang Zemin became president of China in 1992 they embarked on an extensive reform program of the economy. Zhu Rongji was first made vice premier and in charge of the economy and then premier between 1998-2003. Financial reform, SOE reform, fiscal reform, government streamlining etc took place in this period, but to force further economic and legal changes within China they lacked sufficient power and needed external pressure to take the next necessary reform steps. The WTO membership was that external force that required China to conform to international conventions of trade, intellectual property, and environmental management. Jiang and Zhu of course also expected that China's entry into the WTO would lead to economic expansion.

And indeed, both China and the world came to benefit largely from this new arrangement. China is today a much more open economy than 20 years ago, and it has grown into the world’s largest trading nation, making up 15% of global trade. It has become a manufacturing powerhouse responsible for almost 30% of global manufacturing output and its GDP now makes up more than 18% of global GDP. The long period of low inflation, that now has come to an end, can to a large degree be ascribed to China's role in keeping down costs in the global supply chains.

The flip side of that success is that it has created severe friction between China and the US. With economic power comes political clout, which naturally poses a threat to the present world order. EU worries that many member countries and European companies are now too dependent on the Chinese economy and is increasingly ambivalent in its relationship with China.

Although the current geopolitical tensions can be traced back to the bold decision of Jiang Zemin to enter the WTO, the alternative, a China not part of WTO and not integrated into the global economy would most probably have been a much worse decision for all...

RIP, Jiang Zemin (1926-2022)