Experts debunk flawed 'China squeeze' narrative

China's manufacturing strength is creating more room for industrialization across the Global South instead of squeezing it, as the country continues to supply machinery and components to and make investments in developing economies, enabling them to build up their own industrial capacity, said analysts and business leaders.

Earlier this year, a report released by the Peterson Institute for International Economics, a think tank based in Washington, DC, claimed that China's continued dominance in low-skilled manufacturing is squeezing the capacity of developing economies, limiting their export opportunities, and leaving less room for them to industrialize and move up global value chains.

Analysts said the so-called "China squeeze" argument rests on the sole assumption that global manufacturing is a fixed pie, with every gain for China coming at the expense of another developing economy — a view that is completely at odds with the way global supply chains work.

Adam Tooze, a professor of history at Columbia University in New York, said the claim lacks a solid empirical basis, and instead turns complex global development challenges into a simplistic narrative that blames China and portrays its industrialization as a threat.

Tooze made the remarks last week in a post on the online publishing platform Substack. He said that such claims attribute China's enduring strength in low-skilled manufacturing to "unfair policies", but fail to explain why Chinese producers remain competitive despite rising wages and profound changes in the global manufacturing landscape.

Zhang Monan, deputy head of the department of American and European studies at the China Center for International Economic Exchanges in Beijing, said that China's manufacturing competitiveness has been built through sustained innovation, economies of scale and supply-chain coordination, rather than the policy distortions often cited by Western critics.

"Restricting competitive Chinese products will raise production costs, slow technological progress and increase supply-chain fragmentation," she said, emphasizing that developing economies need affordable manufacturing capacity to advance their industrialization and green transformation.

In late July, a meeting of the Political Bureau of the Communist Party of China Central Committee called for efforts to promote more balanced trade growth and expand mutually beneficial international economic and trade cooperation.

Speaking at a news conference in Beijing last month, Yan Dong, China's vice-minister of commerce, said that some countries are using the so-called "China squeeze" argument as a new version of the "China threat" narrative, seeking to drive a wedge between China and the Global South, while deflecting attention from their own historical and present-day responsibilities.

Tu Xinquan, dean of the China Institute for WTO Studies at the University of International Business and Economics in Beijing, said that China's industrial rise has brought developing economies "greater access to machinery, technology, investment and supply chains, helping them build up their production capacity and accelerate industrialization".

For example, China plans to provide developing countries with 5,000 opportunities for artificial intelligence training and seminars over the next five years.

According to the Ministry of Commerce, between 2012 and 2024, China exported textile machinery worth more than $30 billion to developing economies, helping countries in Southeast Asia and South Asia emerge as major textile producers and exporters.

Chinese companies have also established more than 50,000 businesses overseas, with an investment stock exceeding $3 trillion, nearly 90 percent of which is in developing economies, data from the ministry showed.

John Pearson, CEO of German logistics services provider DHL Express, said that Chinese companies are increasingly expanding into markets such as Egypt, Thailand and Malaysia, building local operations and forging closer manufacturing and supply-chain links with these economies. "Protectionism will not prevent companies from seeking new markets and trading partners," he added.

Reflecting its confidence in China's trade growth, DHL began phased operations last month at its expanded super gateway at Shenzhen Bao'an International Airport in Guangdong province with a total investment of 1.2 billion yuan ($178 million), according to Shenzhen Customs.

zhongnan@chinadaily.com.cn