Yan Bingqian: Not Crowding Out, But Buying In

China is buying more from Global South countries, embedding them in its supply chains and generating a stream of income and jobs 

The “China squeeze” narrative claims that China's continued strength in low-skill, labor-intensive manufacturing is stealing industrialization from the developing world, and that China is, somehow, blocking India, sub-Saharan Africa and other Global South economies from climbing the very ladder China itself once climbed. The argument sounds plausible until one looks at what China actually does on the ground — and at the numbers. 

The premise is wrong on its face, because it treats global manufacturing as a fixed pie. Development is not a queue in which one country's advance must mean another's retreat. But the better refutation is empirical, and it comes in three parts. 

First, China builds the foundations that industrialization requires. Through the Belt and Road Initiative, in Africa alone, Chinese companies have helped build and upgrade more than 10,000 kilometers of railways, nearly 100,000 km of roads, close to 1,000 bridges and roughly 100 ports. Since its opening, the Mombasa-Nairobi Standard Gauge Railway, run on Chinese standards and equipment, has created more than 74,000 jobs for Kenyans and contributes over 2 percent of Kenya's GDP. The Addis Ababa-Djibouti Railway has cut freight time from several days by road to 20 hours, and has already been handed over to Ethiopian and Djiboutian operators — a transfer of running capacity, not a holding of it. Infrastructure is the scarcest input in low-income industrialization; China supplies it, and the resulting connectivity lowers the cost of doing business for every producer, local or foreign. 

Second, China's investment and aid are actively industrializing these economies, not deindustrializing them. China has been Africa's largest trading partner for 15 years, with two-way trade reaching a record $282 billion in 2023, and its direct investment stock in Africa now exceeds $40 billion, spreading across more than 3,000 companies. At the 2024 Forum on China-Africa Cooperation Beijing Summit, China committed 360 billion yuan ($53.6 billion) over three years in credit, assistance and enterprise investment. These flows go disproportionately into factories and export zones, not merely raw-material extraction. 

Third, and most decisive, China is not only building railways and writing checks — it is building factories and transferring know-how. Across Ethiopia, Chinese companies have constructed the Hawassa, Kombolcha and Dire Dawa industrial parks and the Eastern Industry Park, which together host hundreds of enterprises and have generated tens of thousands of formal manufacturing jobs, from textiles and garments to footwear and assembly. Seventeen Luban Workshops across Africa train local technicians. The pattern is building, training, then handing over the management: Workers move from sewing lines to supervisors, from operators to railway managers. This is technology transfer and job creation measured in livelihoods, not rhetoric. 

The clearest test of the “squeeze” narrative is whether China's rise is pulling the Global South up with it or pushing it down. Input-output accounting gives a direct answer. Based on the EXIOBASE multi-regional input-output tables and the value-added components embedded within China's production, the record is unambiguous. Between 1995 and 2022, the share of China's total output stemming from intermediate inputs sourced from Africa and the Middle East rose continuously — for Africa excluding South Africa, it rose from about 0.04 percent to 0.12 percent, and for the Middle East from about 0.10 percent to 0.43 percent. The share of these regions in China's total intermediate inputs likewise climbed, reaching roughly 0.19 percent and 0.68 percent, respectively. And the value added in these regions driven by China's production of final goods grew explosively: from about 572 million euros ($662 million) in 1995 to nearly 47.9 billion euros in 2022 for Africa, excluding South Africa, and from about 1.4 billion euros to 167.8 billion euros for the Middle East. 

China is buying more from these countries, embedding them more deeply in its own supply chains, and, through its final demand, generating a rapidly rising stream of income and jobs in them. That is not a squeeze; it is a lift. A country that crowds out its neighbors does not, year after year, become a larger market for their inputs and a larger engine of their value added. The China-proposed Global Development Initiative explicitly identifies “results-oriented actions” and “benefits for all” as important principles. It emphasizes that no country should be left behind and calls on developing countries, especially the least developed countries, to be more deeply integrated into global industrial, supply and value chains. This is consistent with the inherent logic of building a community with a shared future for humanity. That is, the development of each country is not a zero-sum game, but can achieve a high-level dynamic balance through demand and supply for each other. 

Through expanding imports of farm produce, resource and energy products, and industrial manufactured goods from developing countries, and promoting infrastructure connectivity and production capacity cooperation, China is essentially transforming the dividends of its own super-large market into growth momentum for other economies. What emerges from this is not a one-way aid, but a new form of economic circulation based on comparative advantage and shared development. This circulation means China is not squeezing the development space of other countries, but enlarging the pie of common development; not seeking short-term unilateral gains, but cultivating broader and more resilient partnership through long-term interaction. 

The “China squeeze” narrative is a counterfactual grievance dressed as economics: If China had not industrialized the way it did, others would have. But this assumes a fixed global division of labor where one country's industrial rise necessarily comes at another's expense. In reality, development has always been structural and uneven. There is no evidence that other developing economies would have industrialized faster or more successfully in the absence of China's participation; if anything, the record points in the opposite direction. Across infrastructure, manufacturing capacity and export upgrading, China's involvement has often compressed development timelines, reduced costs, and supplied much-needed capital, technology and market access. The question is not whether others could have developed without China, but whether China's rise has made their development faster, more feasible and less constrained — and on this point, the evidence is largely affirmative. 

The author is an associate research fellow at the National Academy of Economic Strategy at the Chinese Academy of Social Sciences and the managing editor of China Finance and Economic Review. 

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily. 

Contact the editor at editor@chinawatch.cn.