Engaging with China in the 21st Century: Part I

Mariano Browne

The “Silk Road” was a term coined to describe the network of overland and maritime trade routes that connected East, South, and Western Asia with the Middle East and Europe for about 1500 years. Chinese silk was the most famous export, but merchants also traded porcelain, tea, paper, gunpowder, spices, glass, textiles, and precious metals. The expansion of the Ottoman Empire following the Fall of Constantinople in 1453 disrupted these lucrative overland trade routes between Europe and China. This disruption helped spark what became known as the “Age of Discovery.”

It is one of the supreme ironies of history that the discovery of the Americas and the Caribbean (the New World) occurred because European explorers were searching for an alternate trade route to China. The discovery of this new world led to a period of expansion, colonisation, and economic exploitation, which created the Transatlantic Slave Trade. The initial colonial wave later paved the way for massive waves of voluntary migration from Europe and Asia, fundamentally shifting the global demographic landscape to what we know today.

Fast forward 534 years, France, Spain and England, superpowers of the colonial era, are now middle powers largely focused on Europe but retaining trade and cultural links with their now independent former colonies, who are pursuing their own development path and strategic interests. In the intervening period, new hegemons (China and the United States) with global strategic interests have emerged. The new era of globalisation has transformed the mercantilism of the past into the free trade of today.

WWII ravaged the economies and physical infrastructure of the European and Asian battlegrounds. The United States emerged with its economy intact, manufacturing half of the world’s merchandise output. It championed a multilateral architecture designed to prevent a recurrence of the 1930s-style economic protectionism, thereby fostering global stability. The United Nations, the World Bank, and the International Monetary Fund were the institutions created to foster this international cooperation. This was complemented by an emphasis on reducing global tariffs and moving toward freer trade as the basis for world economic growth, peace, and stability. Trade rather than aid was seen as the mechanism for integrating newly independent countries into the global marketplace and as a more sustainable path to economic self-reliance than relying on aid from donor countries. The free trade movement eventually crystallised in the formation of the World Trade Organisation (WTO) in 1994.

A key beneficiary of the emphasis on freer world trade was China. In the process, China transformed from a minor player accounting for less than 1 per cent of global trade in the late 1970s into the world’s largest exporter and a global manufacturing powerhouse. It achieved this through state-guided economic reforms, strategic international integration, and massive infrastructure investment. The UN Trade and Development body (UNCTAD) offers a compelling account of China’s rise as an economic powerhouse (China: The Rise of A Trade Titan). China’s emergence from the periphery of world trade to a global trade titan drove its rapid economic growth. It achieved 35 years of double-digit economic growth (greater than 10 per cent), lifting more people out of poverty than anywhere else in the world and propelling it to become the world’s second-largest economy.

China’s experience holds many lessons for countries everywhere. It shifted from a rigid centrally planned economy by adopting a series of market reforms, creating Special Economic Zones and opening the economy to foreign direct investment. This facilitated export-led growth built on an abundant and competitive labour force, as predicated by the Arthur Lewis model. While early exports may have consisted of low-cost manufactured goods, China scaled up its manufacturing value by producing a wide range of high-value equipment, deepening the manufacturing process and creating deep value chains. It joined the World Trade Organisation in 2001, dismantled major tariff and non-tariff barriers, integrated into global value chains, and allowed multinational companies to shift manufacturing plants into the country.

This process did not occur by happenstance. While China moved away from central planning, it did not abandon planning. The Chinese government coordinated long-term economic strategy through multi-year national plans. In the 1980s, 1990s, and early 2000s, China leveraged its massive and growing domestic market by requiring foreign multinational corporations to enter through joint ventures with local firms. This facilitated explicit licensing and implicit knowledge transfer, allowing domestic firms to absorb global manufacturing and engineering expertise.

To sustain innovation and technology development, the state also needed to emphasise human capital. Knowledge is reposed in people, not physical infrastructure. Education in this process was a strategic industrial input designed to maximise human capital for economic modernisation. Furthermore, this technological transformation and development was transferred to areas that led to people-centred development: robust infrastructural development in roads, cities, ports, and transport systems. China adopted its 15th Five-Year Development Plan in March 2026. These state-guided development plans follow a multi-decade strategy focused on technology absorption linked to indigenous innovation and large-scale industrial deployment.

China has understood that for its growth to be sustainable, it must build partnerships. Accordingly, in 2013, under President Xi Jinping, it launched its Belt and Road Initiative (BRI), a global infrastructure and economic development strategy. How should the Caribbean and Latin America respond?

Mariano Browne is the Chief Executive Officer of the UWI Arthur Lok Jack Global School of Business.