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It's just capitalism. They externalized costs in the form of human suffering and subsidized the rest, which let them dominate the market and advance their technology and (most importantly) skill to the point of surpassing most of the world. China sells a lot of crap only because that's what the market demands; "chinesium" is a myth now: the truth is their capability for quality is just as high as their capability for quantity ever was, and it's been that way for a little over a decade. Assuming the population problems don't stress social issues too much, China is primed to be the next US.
It's post reconstruction Japan all over again. Once mocked for making only cheap low quality products, and then feared by America to overtake them as the largest economy in the world before the economic bubble burst.
It's one of the reasons cyberpunk as a genre has so much Japanese culture in it. In the 80s the US thought that the dollar would be replaced by the yen as the world's currency and English would be replaced with Japanese as the language of trade. They thought that Americans would be eating their meals with chopsticks in a decade's time as they were rendered culturally obsolete.
I was a kid in the 80s and remember the fear of Japan. Funny in retrospect, but it was real and it was pervasive at the time.
And now, now think Japan in the 80s but with the economic power and domestic market of China...