Shattering the 'squeeze' myth: How China's upgrading empowers the Global South

A new narrative has gained traction among Western media and think tanks: the so-called 'China squeeze,' which frames China's industrial upgrading as a zero-sum game designed to stifle industrialization elsewhere. This one-sided argument, built on counterfactual premises, is clearly ideologically driven and serves to manufacture public consent for trade protectionism and geopolitical bloc-building. By severing the connection between expanding global markets and industrial progress, it misrepresents how global value chains actually operate and disregards decades of mutually beneficial cooperation between China and the rest of the Global South. This argument draws on a mechanical 'industrialization script' long propagated in Western economic doctrine, assuming late-moving economies can industrialize merely by receiving structural transfers from advanced nations. However, this perspective obscures the deep-seated structural flaws of the global core-periphery paradigm. In practice, China's industrial development contradicts this outdated premise. The movement of Chinese manufacturing toward higher-value-added sectors—driven by rising domestic labor and land costs—has progressively shifted lower-value activities overseas. Vietnam has become Nike's principal footwear manufacturing base, while Cambodia and Indonesia secure expanding orders for apparel, luggage, and leather goods. These trends disprove the claim that China maintains a permanent monopoly in low-end manufacturing. Contemporary international division of labor has evolved beyond a zero-sum paradigm. Modern value chains comprise distinct functional stages within modular production networks, ranging from upstream research and design to core component manufacturing and downstream processing. As China advances to higher-value links and reallocates assembly capacity globally, it facilitates an integrated, cross-border production ecosystem rather than a mutually exclusive competition. China's overseas industrial cooperation extends beyond capacity relocation, providing end-to-end technological, infrastructure, and organizational empowerment. A flagship example is the $6 billion electric vehicle battery project jointly developed by Chinese enterprises and Indonesian state-owned entities, establishing Indonesia as the sole Southeast Asian nation with a fully integrated power battery production ecosystem. Sustained financial and policy support continues through initiatives like the Belt and Road Initiative, the Asian Infrastructure Investment Bank, and multilateral cooperation forums with Africa and Latin America. These platforms provide crucial long-term infrastructure financing and trade facilitation. As of June 2024, Chinese overseas industrial parks numbered over 70 across 46 nations, representing nearly $80 billion in cumulative investment and generating over 550,000 local jobs. China plans to broaden strategic cooperation in high-growth sectors such as green technology and the digital economy. By executing targeted programs—including digital capacity-building initiatives and unilateral zero-tariff policies for African nations—it seeks to enhance multi-dimensional connectivity for Global South economies. The opportunities created by global industrial relocation are open to all nations, but a country's capacity to absorb shifting production hinges on its structural factor endowments and institutional efficiency. Data from historian Adam Tooze shows that in 2022, China's share of global garment exports declined by 7.5%, allowing Vietnam and Bangladesh to expand their market shares by 3.5% to 4%. India's share, despite its population rivaling China's, has remained stalled at roughly 3-4%, due to internal bottlenecks like rigid labor laws and deficient logistics infrastructure. The 'China squeeze' theory misconstrues highly integrated global value chains through an isolated framework. China's industrial advancement and the economic rise of Global South nations are fundamentally complementary, not mutually exclusive. Through orderly transfer of industrial capacity and market opening, China has consistently energized global capacity expansion, enlarging the shared global economic pie rather than restricting development opportunities for partner nations.