A series of figures carrying items that signify industrial growth. Photo: South China Morning Post.
By Zhou Xiaoming – Jul 31, 2026
Far from stifling development, China’s export portfolio indicates a positive-sum diffusion of industrial growth
A scaremongering narrative has taken root in Western corridors and financial press columns: China, having saturated developed markets, is now aiming to crush fragile industries in developing nations, effectively slamming the door on their industrial dreams. It is a convenient little tale. However, it does not hold up against empirical evidence.
The premise assumes that China and the Global South are fighting over the same slice of the global consumption pie – cheap T-shirts, plastic sandals, toys. However, China’s export basket has changed. The share of intermediate goods, such as components and semi-finished products for downstream manufacturing, rose from roughly 42 per cent in 2017 to about 46 per cent by 2023.
Over the same period, the share of consumer goods fell from about 36 per cent to roughly 33 per cent while the share of capital goods held steady at around 20 per cent. This is not the cargo manifest of a predator hunting for sneaker shelf-space. It is the supply list of a systemic partner that is feeding other nations’ industrial engines.
Now look at the sector where you would expect the fiercest head-to-head competition – labour-intensive consumer goods. If China were truly monopolising the export space of others, its share would be stable or climbing. In reality, it is falling. China’s share of global garment exports fell to just under 30 per cent in 2024, a significant drop from its peak of over 40 per cent about a decade ago.
Footwear tells a similar story. China’s share has dropped while Indonesia and India have gained ground. Instead of elbowing others aside, China is moving up the value chain and creating space for lower-income nations in other sectors.
China is not shipping goods to outcompete Global South producers; it is shipping the building blocks that make factories viable. According to an Oxford Economics report, nearly half of China’s total exports are intermediate goods – components and raw materials that feed into other countries’ production lines rather than finished products for consumers.
Take Southeast Asia. Customs data from the first half of 2026 shows China’s intermediate goods exports to Association of Southeast Asian Nations member states rocketed 24.5 per cent year on year to 2.86 trillion yuan. These kinds of inputs help Vietnamese electronics assemblers, Thai auto-part makers and Malaysian chip packagers produce and export their own finished goods. This is deep integration – China supplying the “organs”, Asean flexing the “muscles.”
Beyond components, there are capital goods. China’s enabling role also comes into play here. For decades, a major barrier to industrialisation was the staggering cost of capital equipment. Today, Chinese-made industrial machinery is dramatically more affordable.
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Capital goods account for a sizeable share of China’s exports to other developing countries. As Chinese capital and equipment are building industrial capacity across the Global South, China is turning itself into the “mother machine” of the industrialising world, transforming technology and production know-how that Western development aid never delivered.
Critics will point to trade deficits. Yes, China runs surpluses with multiple developing nations. But look closer. Take Vietnam for instance. Its 2025 trade deficit with China stood at around US$115 billion. Yet imports of capital and intermediate goods tell the real story. In 2025, capital goods such as computers, electronics, and machinery accounted for over half of its total imports. Vietnam’s deficit is a receipt for industrialisation.
In the 2025-26 financial year, India’s imports from China reached US$131.6 billion. That represents 16 per cent of India’s total imports. According to the Global Trade Research Initiative, around two-thirds of these imports – some US$82.6 billion – are concentrated in four categories: electronics, machinery, computers and organic chemicals.
In 2025, Thailand imported over US$100 billion worth of goods from China. Electrical machinery and equipment and machinery including computers accounted for a sizeable share. Thailand’s Office of Industrial Economics reported that in the third quarter of 2025, capital goods imports overall surged by 25.5 per cent year on year; raw materials and intermediate goods rose 14.3 per cent.
Clearly, intermediate and capital goods are partly responsible for these countries’ trade deficits with China, but they are the goods that underpin industrialisation. We are witnessing a historic reorganisation of global production – one that offers developing nations their first genuine shot at industrialisation without waiting for Western handouts.
To be clear, China’s exports pose a challenge to sectors such as automobile and home appliances in South Africa and Brazil. However, China’s exports are primarily the scaffolding on which other Global South countries are erecting their own industrial futures. Tear that scaffolding down, as some want, and you deprive scores of developing economies of a route out of underdevelopment.
Let’s also not forget imports. China is the top export destination for 79 countries and regions. In May, it expanded its zero-tariff import policy to 53 African countries. Painting China as a threat to development ignores how Beijing is widening its doors to products from the Global South.
China’s export boom is not zero-sum encroachment but positive-sum diffusion of industrial capacity. Its shrinking share in labour-intensive goods, its rising share of intermediates, its technology transfers, its growing import demand and its role in slashing industrial entry costs all point to the same conclusion: China is accelerating the Global South’s development, not arresting it.
Lastly, Western critiques are rather paternalistic, assuming developing nations are passive victims, incapable of making rational choices about their own trade relationships. That condescension, echoing the “white man’s burden”, is the real obstacle to the Global South’s prosperity.
Zhou Xiaoming is a senior fellow at the Centre for China and Globalisation in Beijing and a former deputy representative of China’s Permanent Mission to the United Nations Office in Geneva.
