Editor's note: Lyu Yue, a special commentator for CGTN, is the vice dean of the School of International Trade and Economics, University of International Business and Economics (UIBE), and the director of the Lab for Global Innovation & Governance, UIBE. Chen Yanbing, a special commentator for CGTN, is a PhD candidate at the School of International Trade and Economics. The article reflects the authors' views and not necessarily those of CGTN.

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. That model assumes late-moving economies can industrialize merely by receiving structural transfers from advanced nations and integrating into existing global divisions of labor. 

However, this perspective obscures the deep-seated structural flaws of the global core-periphery paradigm. In an inherently asymmetrical international economic order, late-developing nations remain trapped in patterns of dependent development – their economic stability exposed to external disruptions and their policy autonomy in critical industries continually restricted. In practice, no universal, linear formula for industrialization exists.

China's industrial development actually directly contradicts the outdated premise. The movement of Chinese manufacturing toward higher-value-added sectors – and the orderly transfer of its lower-value activities – reflects market forces driven by changing domestic cost structures. Driven by rising domestic labor and land costs, capacity in textiles, footwear, and electronic assembly has progressively shifted overseas. Vietnam has established itself as Nike's principal footwear manufacturing base, while economies such as Cambodia and Indonesia are securing expanding orders for apparel, luggage, and leather goods. These empirical market trends soundly disprove the claim that China maintains a permanent monopoly in low-end manufacturing industries.

Furthermore, contemporary international division of labor has moved well beyond a zero-sum paradigm where a single nation dominates an entire sector. Modern value chains comprise distinct functional stages within modular production networks, ranging from upstream research and design to core component manufacturing and downstream processing and assembly. As China advances to higher-value links and systematically reallocates assembly capacity globally, it facilitates an integrated, cross-border production ecosystem rather than a mutually exclusive, zero-sum competition for market share.

To be sure, China's overseas industrial cooperation extends far beyond simple capacity relocation; but then it provides end-to-end technological, infrastructure, and organizational empowerment to partner economies. A flagship example is the $6 billion electric vehicle battery project jointly developed by Chinese enterprises and Indonesian state-owned entities. Spanning the entire value chain from local nickel extraction and refining to battery cell manufacturing, this initiative will establish Indonesia as the sole Southeast Asian nation with a fully integrated power battery production ecosystem.

Besides, sustained financial and policy support continues to flow to developing economies, underpinned by the Belt and Road Initiative, the Asian Infrastructure Investment Bank, the Silk Road Fund, and multilateral cooperation forums with Africa and Latin America. These institutional 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 more than 550,000 local jobs.

Moving forward, 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 and assist other Global South economies advance from the periphery to the core of global supply chains.

The opportunities created by global industrial relocation are open to all nations, but a country's capacity to absorb shifting production hinges fundamentally on its structural factor endowments and institutional efficiency. According to data from historian Adam Tooze, in 2022, China's share of global garment exports declined by 7.5%, unlocking tens of billions of dollars in market space. Vietnam and Bangladesh capitalized on this momentum, each expanding their global market shares by 3.5% to 4%. 

By contrast, India's share – despite its population rivaling China's – has remained stalled at roughly 3-4%. This sluggish response stems not from external displacement, but from deep-seated internal bottlenecks: rigid labor laws, deficient logistics infrastructure, and a service sector out of step with manufacturing needs. The notion that export market share should automatically mirror population size is mechanically flawed and flies in the face of core international trade theory.

Any sound assessment of China's cooperation with the rest of the Global South must acknowledge its concrete contributions toward overcoming structural industrialization bottlenecks in developing economies. The "China squeeze" theory misconstrues highly integrated global value chains through an isolated and simplistic framework. 

China's industrial advancement and the economic rise of Global South nations are fundamentally complementary, not mutually exclusive. Through the 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.

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