[Son Sung-jin's Column] China Is Reshaping the Global Industrial Landscape. What About Us?

Two hundred years ago in Europe, trains ran on the power of steam engines, and textile mills began using machines to weave cloth. It was the First Industrial Revolution: 300,000 years after Homo sapiens first appeared, machines began replacing work humans had done by hand. The wealth and power amassed through the Industrial Revolution led European empires to compete in ruling colonies. The British Empire was the most powerful nation, ruling 25% of the world's land.
The United States emerged as a superpower after World War I, a century ago. By leading the way with Ford's conveyor-belt system, the United States opened the path to mass production and at the time produced at least 80% of the cars in operation worldwide. It controlled at least 70% of global oil production and, with historic inventions such as electricity, airplanes and television, was the one and only superpower to dominate world markets.
The glory of the United States and the former imperialist powers that followed it, including Europe and Japan, was seen as an eternal flame. Their traditional manufacturing technologies had reached a level that latecomers would find difficult to surpass. But nothing lasts forever. The rapid development of high-tech industries, which can change overnight, is overturning 200 years of history in a short time. China is at the center of it.
China's rise is rapidly reshaping the global industrial landscape. It took only a few decades for China, once called the “world's factory” and seemingly destined to remain a production base, to emerge as an industrial leader. It is as if the potential that lay dormant for a thousand years after the prosperity of the Tang and Song dynasties is now exploding.
The deft combination of socialist control and capitalist freedom proved more effective than other developmental dictatorships. China's distinctive “rise”—which guarantees economic freedom while the state controls policy and drives it forward—is producing results beyond expectations and putting the world on edge. Take South Korea, for example: BYD's sale of more than 20,000 electric vehicles just nine months after entering the Korean market was a symbolic event.
China lies at the root of protests by people in Europe, far from Asia, that seem to threaten the system. Chinese consumer goods, wielding price as a weapon, have been flooding across the sea into Europe for a long time. European consumers are willing to wait even a month for Chinese-made products that are reasonably good in quality and inexpensive.
Chinese electric vehicle brands are taking over European roads once traveled by Mercedes-Benz and Renault cars. China has already made inroads into the European market in other sectors as well. Over the past 10 years, the European Union's (EU) imports from China at least doubled, from $356.4 billion to $724.8 billion. Ninety percent of batteries and 98% of solar products are made in China. The birthplace of the Industrial Revolution is being swallowed up by China.
Europe's mistake was resting on traditional manufacturing. The auto industry and the heavy and chemical industries, built on machinery and chemicals, were pillars that sustained Europe for two centuries after the Industrial Revolution. Its craftsmanship-driven technological prowess continued to lead, but Europe did not invest in the Third and Fourth Industrial Revolutions led by computers, semiconductors, the internet, robotics and artificial intelligence.
Japan, which maintained the same conservative stance as Europe, was no different. The decline of companies such as Nokia, Philips and Sony dealt a direct blow to Europe and Japan's fortunes. The center of industry is shifting from Europe and Japan to China. Chinese companies are focusing on high-tech industries while continuing to acquire traditional European manufacturers such as automaker Volvo Cars.
When its economy was flourishing, Europe lavishly handed out welfare benefits. Once granted, benefits are difficult to take back. When times are good, taxes come in readily, so there is no problem. But as the economy headed downhill, a lack of money made it difficult to deliver on promised welfare policies. Angry people poured into the streets, but the government had no alternative to offer.
There is no reason South Korea could not become a second Europe. It has done well in semiconductors, and it is still doing well. That is thanks to visionary entrepreneurs. But this is no time for anyone to focus solely on semiconductors and say, “We're different from Europe.” We must first grasp the reality hidden behind semiconductors. Some say the auto industry is already finished. That is an extreme way of putting it, but it shows just how formidable China's momentum is.
In a decade or so, China could pull the United States down beneath it. Even the United States is afraid; this is no time to bask in complacency. “China Redwave” is sweeping over South Korea like a powerful wave. We cannot hold it back by developing Korean-style artificial intelligence and building enormous semiconductor factories. We must nurture startups and cultivate an industrial ecosystem. If officials do not know how, they should go to China and learn. There is little time left in this golden window of opportunity.
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