China: A brake on the development of the Global South?
The official documents published by the Chinese government They tend to be repetitive and bureaucratic. But reading them in detail, taking notes, can lead us to discover gems that help us better understand China's worldview. A few days ago, I was reading the document. Made in China 2025, the most important technology strategy that China has released in recent decades. Published in 2015, the document identified the cutting-edge technological sectors in which China should invest to catch up with the West. But what caught my attention was a sentence at the beginning of the strategy that explained the "foundation" by which modern powers have become "global powers." Curiously, that foundation was not technology or militaries, nor alliances or ideology. For the Party, the basis for becoming a superpower is "manufacturing."
China is clearly the great industrial power of the 21st century. As economist Arthur Kroeber explains, the Asian powerhouse accounts for a third of global manufacturing. And, as the Made in China 2025, doesn't seem willing to give it up: if the basis of geopolitical power is manufacturing, wouldn't deindustrialization be shooting itself in the foot?
If we take this industrial-centric vision of China seriously, many of the economic decisions of recent years make sense. Unlike other developing powers—such as the United States or the European Union—China has not been shifting toward a service-oriented economy. The technological industries it is most interested in dominating are the physical ones of hardware, not the virtual ones of software. With its current demographic decline, some Chinese economists already say that mass robotization—not immigrants—will be the key to maintaining a strong industry. The great green transition that China is undergoing is, at its core, a process of electrifying the country: if your main source of energy is renewable energy, the industrial advantage you have in energy prices is enormous.
A third of the world's manufacturing
Maintaining a manufacturing base as a pillar of the country may be good for the Chinese economy and its geopolitical power. But those most likely to suffer from this strategy are the developing countries of the Global South. As economists like Dani Rodrik have explained, most countries that have developed their economies have relied on strong local industries, serving as a transition between the primary sector and a service economy. That's why East Asia, for example, has prospered more than Latin America.
China, Japan, South Korea, and Taiwan were able to industrialize largely because the West transitioned to a service economy and left room for industries abroad. All of this seems unlikely to be repeated if China persists in dominating a third of global manufacturing. Despite Beijing's repeated attempts to portray itself as a leader of the Global South, it could end up being one of its most damaging obstacles.
