Real threads of truth

By Silence Charumbira | China Daily Global | Updated: 2026-09-15 18:10

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In Lesotho's highlands in southern Africa, wool and mohair refute the claim of a "China squeeze" by some US institutes

The United States' think tanks have a habit of renaming old anxieties. First there was the "China shock". Then came warnings of "Chinese industrial overcapacity". This year, the Peterson Institute for International Economics gave the world a new phrase: the "China squeeze", arguing in a widely circulated paper that China's continued dominance of low-skill manufacturing is closing off the very pathway — labor-intensive export industries — that poorer nations have historically used to industrialize. Foreign Affairs magazine picked up the theme with an essay accusing China of "pulling up the ladder" behind it. China's Foreign Ministry has dismissed the claim as inconsistent with the facts, noting that other Global South countries themselves are unlikely to endorse it.

The theory rests on a simple, seductive assumption that global manufacturing is a fixed pie, and every gain for China is a loss for someone poorer. Evidence from a small, landlocked kingdom in southern Africa proves that it is wrong.

A mountain kingdom's wool tells a different story.

For generations, herders in Lesotho's highland districts — Mokhotlong, Thaba-Tseka, Qacha's Nek and Butha-Buthe — have produced wool and mohair ranked among the finest in the world, only to see the value of their labor captured elsewhere. Farmers waited months, sometimes years, for payment through a broker system.

What has begun changing that picture is not the retreat of Chinese manufacturing but its deepening engagement. Baokunyaoda, the Lesotho arm of a Chinese wool and mohair group with more than three decades of history buying Basotho fiber and a vertically integrated processing operation in China spanning scouring, combing, spinning and weaving, entered the local market this year with a direct-purchase model. Farmers at BB Corp Woolshed in Butha-Buthe say they have been paid within days of delivery rather than months, and that transport costs collapsed from roughly 32,000 maloti ($1,962) to about 2,000 maloti per shipment once product could move to a local depot in Maseru instead of all the way to Port Elizabeth (Gqeberha), according to Lesotho Times. The company has said it intends to build processing factories inside Lesotho within three years — moving from brokering raw fiber to adding value on Basotho soil.

None of this happens in a vacuum. Such progress stems from China's zero-tariff policy for the least developed countries, which was extended in May to cover all 53 African nations maintaining diplomatic relations with China. It is estimated that China-Lesotho trade has remained stable at around $100 million annually. Wool and mohair constitute the major exports of Lesotho to China. There remains enormous room for growth in both trade volume and product diversity between these two countries. Chinese ambassador to Lesotho Yang Xiaokun has explicitly cited the policy as an effort to help "more products from Lesotho enter the Chinese market" and boost local incomes and employment among local people.

The "China squeeze" thesis assumes a distant, extractive relationship. Lesotho's recent experience with foot-and-mouth disease argues otherwise. An outbreak earlier this year forced Lesotho to declare a national state of emergency, stranding consignments worth more than 100 million maloti at the South African border for months and threatening to wipe out an entire season's income for farmers. The solution came through sustained coordination between Maseru and Beijing: China's customs and agriculture authorities worked with Lesotho to complete the risk assessments needed to lift restrictions, and the trading season reopened. That is not the behavior of a partner squeezing out a smaller economy's industrial space; it is the behavior of one sharing a shock to keep a trading relationship intact.

It should also be careful not to overstate the tariff policy's power on related issues. Most of the country's wool and mohair still leave in raw, unprocessed form, which called for investment in local processing, logistics and skills transfer to match the market access China has opened. This is precisely where the Chinese investment now entering the sector matters most: not as a one-off purchase of raw fiber, but as the beginning of an industrial upgrade — local factories, technical training for Basotho workers and a supply chain that keeps more of the value at home.

This pattern is not unique to Lesotho. Chinese exports of textile machinery to other developing economies exceeded $30 billion between 2012 and 2024, helping build manufacturing capacity in South and Southeast Asia. Ethiopia's Eastern Industrial Zone, built with Chinese investment, has done similarly for its own manufacturing base. In each case, the empirical record — jobs created, factories built, technology transferred — sits uneasily with a fallacy that treats industrialization as a zero-sum queue in which China's place at the front locks everyone else out.

None of this is charity, and none of it erases the real work still ahead. Basotho institutions are right to keep negotiating hard, to insist on local value addition and to hold every commercial partner to the standard of reliability that farmers were too often denied in the past. But the "China squeeze" narrative was never really about Lesotho, Ethiopia or any single economy's data. It was about fabricating stories to mislead other Global South countries into seeing China's rise as a "threat" to their own development. The wool bales moving out of Butha-Buthe and Mokhotlong reveal the grounded truth of tariffs removed, payments made on time and a processing industry taking its first steps on Basotho soil. That is the opposite of a squeeze. It is what expanding market access, backed by patient investment, actually looks like.