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Recent Turmoil in China’s Neighboring Countries: Causes and Trends

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In handling international relations and diplomatic affairs, China has always adhered to an important strategic principle: “major countries as the key, neighboring countries as the priority, developing countries as the foundation, and multilateral forums as the stage.” Neighboring regions are an important foundation for China’s development and prosperity, a key area for safeguarding national security, a top priority in shaping overall diplomatic strategy, and a critical factor in promoting the building of a community with a shared future for mankind. Therefore, stability and security in the neighboring regions are of vital importance to China, and managing relations with neighboring countries stands as a major focus of China’s diplomacy. On this basis, the recent turmoil in neighboring countries such as Nepal, Myanmar, Thailand, and Indonesia deserves careful study and attention.

Causes of Recent Political Turmoil in Neighboring Countries of China

Nepal. The decree issued by the Oli government to shut down over 20 unregistered social media platforms directly triggered strong dissatisfaction among Gen Z youth, serving as the fuse that ignited this round of large-scale social unrest in Nepal. The direct causes are as follows:

1) Young people believe that the Nepalese government is stifling their freedom of speech.

2) Young people are extremely dissatisfied with the corruption in Nepal and the phenomenon of “second-generation rich” showing off their wealth online.

3) The unemployment rate among young people is high, and the Internet is their main means of obtaining economic income.

4) The Internet is the main communication channel between Nepalese citizens and overseas citizens.

However, these are only the superficial manifestations of the contradictions. The deeper crux lies in the corruption of government officials, the widening gap between the rich and the poor in society, and the struggles between political parties. In this incident, the Nepalese people did not target a single political party or its leader; instead, they directed their anger at all political parties, the entire government, and the entire elite or ruling class. This dissatisfaction stems from their discontent with national development and government governance. Essentially, the interweaving of economic stagnation, disordered governance, and the neglect of people’s livelihood has trapped Nepal in a vicious cycle of “protest-suppression-more intense protest”.

Indonesia. The fuse of this round of unrest in Indonesia was the bill passed by the Great Indonesia Movement Party-to which President Prabowo belongs-in the parliament in August this year. The bill proposed a 50 million Indonesian rupiah (approximately 3,000 US dollars) housing allowance increase for members of parliament. For context, the monthly salary of an ordinary Indonesian wage earner is only 5 million Indonesian rupiah. Coupled with the nationwide “Free Nutritious Meal Program” launched in February (which involves the military engaging in business activities) and the subsequent passage of the Amendment to the Indonesian National Armed Forces Law by the parliament (which relates to the military’s intervention in politics), this series of events triggered widespread public concern and anger over the government’s fiscal direction. The protest groups, which were previously dominated by students, expanded to include a broad participation of workers, the unemployed, and the middle class. While the protests were targeted at specific “policies”, their core criticism was directed at Prabowo himself and the military forces he represents behind the scenes. This is because the new policies introduced by Prabowo fail to fundamentally address Indonesia’s underemployment dilemma or increase Indonesians’ incomes. Instead, they may trigger new fiscal instability and inject uncertainties into Indonesia’s political, economic, and social sectors. Essentially, Indonesia’s protests and the subsequent unrest are the result of long-standing structural issues combined with the accumulation of a series of short-term incidents.

Thailand. The recent turmoil in Thailand originated from the border conflict between Thailand and Cambodia, specifically regarding the ownership of the Preah Vihear Temple and its surrounding areas, which subsequently escalated into a military conflict between the two countries. In June, Paetongtarn Shinawatra called Hun Sen, the de facto leader of Cambodia, to discuss the escalating border tensions. However, Hun Sen publicly released the audio recording of their conversation. This “phone gate incident” ultimately led to Prime Minister Paetongtarn Shinawatra’s resignation in disgrace. The territorial dispute between Thailand and Cambodia is a long-standing issue left over from history, but it eventually evolved into a domestic political problem in Thailand. Although the conflict between the two countries subsided in the end under the witness of China and the United States and with the mediation of ASEAN, the fundamental issue remains unresolved. From the perspective of Thailand’s overall political landscape, the influence of the Shinawatra Family has been weakened. Nevertheless, against the backdrop of the military conservatives dominating the political situation, Thailand’s “orange-red-blue confrontation” pattern is unlikely to undergo a fundamental change in the short term. Here, orange generally represents the People’s Party, a radical left-wing political party; red stands for the Pheu Thai Party, which has close ties to Thaksin Shinawatra and advocates reform; and blue symbolizes the right-wing camp that upholds traditional values and holds conservative stances. No matter who becomes the prime minister, they may face impeachment over seemingly minor disputes, or even be forced out of office through constitutional means. This indicates that the phenomenon of frequent prime ministerial changes in Thailand will continue for a period of time in the future.

Myanmar. Myanmar has been trapped in prolonged chaos and instability since the February 2021 military coup, which triggered full-scale clashes between the military junta and ethnic armed organizations (EAOs).Currently, Myanmar is grappling with four major predicaments. First, it faces economic hardship due to Western sanctions. Second, conflicts have intensified between the military junta and EAOs, as well as between the junta and the “National Unity Government” (NUG) represented by Aung San Suu Kyi, pushing the country toward civil war. Third, the military junta exhibits poor governance capabilities. Fourth, the junta is mired in a legitimacy crisis and remains unrecognized by the international community. As a result, Myanmar has fallen into a situation of “one country, two governments” and “one country, three armies”. The three military forces are the Myanmar Armed Forces controlled by the junta, the Myanmar National Defense Force (MNDF), and the People’s Defense Force (PDF)-both of which are under the command of the NUG. This chaos is further compounded by multiple factors. These include the power struggles among neighboring major powers, the activities of non-governmental organizations (NGOs) engaged in color revolutions, and the tangled interests of gray industries and criminal groups. Together, they have plunged Myanmar into extreme disorder. In the past, conflicts between the Bamar ethnic group and other ethnic minorities were the primary source of tension. Today, however, political oppression and economic distress have shattered the confidence of some Bamar people in the military junta. Coupled with pervasive incitement, Myanmar now resembles a volcano, ready to erupt at any moment.

It is evident that the political turmoil in these countries exhibits the following characteristics. First, prior to the outbreak of unrest, these countries had already been mired in prolonged political instability. Cabinets were frequently reshuffled, and governments constantly faced legitimacy crises. Second, while symbolic incidents triggered the unrest, the protests were no longer confined to local issues or specific policies—instead, they spread to questions about the system and institutional flaws. However, the structural problems inherent in these countries’ institutions cannot be resolved by a single incident. Third, young people and social organizations played an increasingly prominent role in these protests. Fourth, symbolic incidents drove the outbreak of demonstrations and their escalation into violent protests. As seen in the aforementioned countries, all witnessed a shift from peaceful assemblies to actions such as storming public institutions, clashing with police, arson, and looting. This evolution has resulted in severe casualties and economic losses.

Political Outlook for Neighboring Countries in the Coming Months

In the next six months, the aforementioned neighboring countries will either enter a transitional government period, kick off election cycles, or undergo cabinet reshuffles—making further political turbulence highly likely. For example,

  1. According to Xinhua News Agency, Sushila Karki, former Chief Justice of Nepal’s Supreme Court, was sworn in as Prime Minister of Nepal’s interim government at the Presidential Palace on the evening of September 12. She will lead a six-month transitional government to pave the way for the national election scheduled for March 5, 2026. Karki’s appointment is the result of negotiations between Gen Z protesters, Nepal’s President, and the military. Many Nepali young people have placed unusually high hopes on her, expecting her to end corruption and drive reform. For Karki, addressing key issues of concern to young people—such as social equity, political reform, and economic development—within just six months will undoubtedly be an immense and challenging task.
  2. On September 5, Anutin Charnvirakul, leader of Thailand’s Bhumjaithai Party, secured a majority vote in a special session of the House of Representatives and was elected Thailand’s new Prime Minister. As noted in relevant commentary, Anutin took office without the support of the Pheu Thai Party, and his term is expected to be short-lived—leaving his minority government highly vulnerable. Anutin has also explicitly stated that the new government will serve for four months, after which a general election will be held.
  3. Myanmar has long been trapped in civil war. Since the 2021 coup in particular, Myanmar’s military junta has extended the state of emergency multiple times, drawing dissatisfaction from both the public and the international community. However, Myanmar’s leader Min Aung Hlaing has announced that the country will hold an election on December 28, 2025.
  4. On September 8, Indonesian President Prabowo announced the first large-scale cabinet reshuffle since he took office in October last year. Among the changes, the removal of Finance Minister Sri Mulyani became a focal point of public attention—an adjustment widely seen as a response to the large-scale public unrest in August.

The aforementioned neighboring countries represent a model of “fluctuating political development”. In other words, they have consistently encountered various challenges during the process of achieving national independence and advancing their political agenda, leading to twists and turns in their political progress.For instance,

  1. Since gaining independence after World War II, Myanmar has been plagued by political instability, driven by power struggles between the country’s military and local ethnic groups. Entering the 21st century, in addition to the conflict between the military junta and ethnic armed organizations (EAOs), the rivalry between the military bloc and the so-called “pro-democratic forces” backed by the United States has largely shaped the trajectory of Myanmar’s political development.
  2. Since the restoration of parliamentary democracy in 1990, Nepal has seen 29 prime ministers and two periods of direct royal rule over the past 34 years. On average, each government has lasted only 13 months, with the shortest-lived administration in office for a mere 60 days. To date, no government has completed a full five-year term.
  3. The alternation between military coups and dynastic politics has been the defining thread of Thailand’s political development over the past 70 years. In the last two decades, forces aligned with Thaksin Shinawatra have won the prime ministerial election six times, nearly monopolizing the position of popularly elected prime minister. In a sense, Thailand has effectively formed a “dual-core structure” dominated by the King and Thaksin: the prime minister’s office is held by members of the Thaksin family or their protégés, while the monarchy remains with the Chakri dynasty. The recent political upheaval in Thailand is a major setback for the Thaksin family, but it does not signal their decline—they could still stage a comeback at any time.

The fundamental cause of the aforementioned political turmoil in neighboring countries lies in inadequate and unbalanced economic development, coupled with a widening wealth gap. These issues remain unsolvable in the short term, so it is foreseeable that public protests in these countries will continue to emerge from time to time. For example,

  1. According to the World Bank, Nepal only transitioned from a low-income country to a lower-middle-income country in 2019. Its GDP growth rate stood at a mere 2% in 2023, while the unemployment rate and inflation rate reached as high as 10.7% and 7.1% respectively. Neither traditional political parties nor emerging ones have put forward effective measures or delivered tangible results to boost economic development. Meanwhile, frequent scandals involving these parties have further complicated Nepal’s political landscape.
  2. During Paetongtarn Shinawatra’s tenure, her administration was mired in the “phone call scandal” and domestic political infighting. Measures to revive Thailand’s economy, boost its tourism sector, and her handling of Thailand-U.S. tariff negotiations were all subject to severe criticism. Her lack of experience and inadequate competence became a focal point of domestic public discourse in Thailand, leading to a steady decline in both the administration’s governing legitimacy and public approval ratings.
  3. Over the past decade, Indonesia has maintained a relatively high economic growth rate and achieved remarkable results in sectors such as the digital economy and mineral downstreaming. Today, it stands as the largest economy in ASEAN and the only member of G20 from the region. With a per capita GDP approaching 5,000 U.S. dollars, Indonesia has been classified as an upper-middle-income country by the World Bank. Even so, pressing issues remain prominent within the country, including corruption, inadequate safeguards for people’s livelihoods, and insufficient national capacity building—all of which have fueled public dissatisfaction.

The political turmoil in the aforementioned neighboring countries will further invite infiltration, interference, and pressure from the United States and Western nations. Prior to the unrest, the governments of Thailand, Myanmar, Nepal, and Indonesia had mostly adopted China-friendly policies. They actively aligned with the Belt and Road Initiative, engaged in infrastructure development, and saw steady growth in trade volumes with China. Against the backdrop of China-U.S. competition and the 9/3 Military Parade—where Indonesian President Prabowo, Nepali Prime Minister Oli, and Myanmar’s Acting President Min Aung Hlaing were all invited to attend—the U.S. and Western countries, having failed to contain China through nations like the Philippines, turned to targeting China’s neighboring states. Their aim is to destabilize these China-friendly governments, create instability on China’s periphery, and divert China’s attention.

While the unrest in these neighboring countries stems from internal factors, the protests were clearly influenced by external forces during their development. This led to peaceful demonstrations gradually spiraling out of control and turning violent, showing certain characteristics of “color revolutions”. From a historical perspective, regions affected by “color revolutions” in the modern world have generally spread along the trajectory of “Eastern Europe → West Asia → Central Asia → East Asia/Southeast Asia”. Key countries on this path are either China’s strategic pivots or traditional China-friendly nations.

Adverse Impacts of Neighboring Countries’ Situation on China

The most direct impact of political turmoil in neighboring countries is that it hinders the smooth advancement of the Belt and Road Initiative (BRI) in South Asia and Southeast Asia. Currently, the core concept guiding China’s engagement in Southeast Asia can ultimately be condensed into one word: development. To achieve development, infrastructure serves as a crucial pillar—a principle encapsulated by the saying, “When roads are connected, prosperity follows.” Political instability in neighboring countries may lead to sudden policy shifts, contract breaches, and project suspensions. These outcomes directly threaten the asset security and profit expectations of Chinese enterprises, and impede the progress of the BRI in this region.

Political instability in neighboring countries will undermine China’s strategic goal of building a regional economic hub. ASEAN has surpassed the EU to become China’s largest trading partner, and Southeast Asia also serves as a key region for China to advance both the Belt and Road Initiative (BRI) and the Regional Comprehensive Economic Partnership (RCEP). Political turmoil will weaken the executive capacity of governments in affected countries, slowing progress on cooperative projects such as the implementation of free trade agreements and cross-border infrastructure connectivity. This, in turn, will hinder the economic development of these countries and the region as a whole, as well as the advancement of regional economic integration.

Against the backdrop of China-U.S. strategic competition, the stability and development of neighboring countries are of great significance to China in competing with the United States. Currently, a “Three-World” structure has emerged around China: China and the U.S. each stand as one pole, with numerous “middle countries” in between. Even countries like Vietnam, Singapore, and South Korea—while once leveraging the U.S.’ so-called “Asia-Pacific Rebalance Strategy” and “Indo-Pacific Strategy” to pursue their own interests—have maintained a fundamental stance of seeking “balance” between China and the U.S., rather than making an “either-or” choice. As China’s economic strength and political influence further grow, the existence of these “middle countries” and their development trends will become more prominent. Winning over more middle countries will thus become a key part of China-U.S. competition. In a word, China needs a stable, peaceful, and developing neighboring environment, and the stability, peace, and development of countries such as Nepal, Myanmar, Thailand, and Indonesia are conducive to China.

Yang Chen, Executive Director and Associate Professor, Center for Turkish Studies, Institute of Global Studies, Shanghai University

Opinion

The women who refuse to be erased: On Japan’s surrender anniversary, the fight over wartime sexual slavery continues

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BUSAN, South Korea — On the day Japan marks the 81st anniversary of its surrender in World War Two, a conference room in Busan’s city council building has become the latest front in a battle over memory.

Allan Wilson, Journalist

Last month, on 23 July, academics, activists and lawmakers gathered here for a symposium on one of the war’s most painful legacies: the estimated tens of thousands of women — euphemistically labelled “comfort women” — forced into sexual slavery by the Imperial Japanese Army. The event was co-hosted by the Carter Human Rights Center’s Asia division and the Korean Women’s Forum.

“The records of the Japanese military’s comfort women are historical assets that the international community must preserve together,” Nam Myung-sook, the Busan city councillor who co-organised the symposium, told the gathering. “Social consensus must be broadened.”

Her words were aimed at more than the audience in the room.

For three decades, survivors and their advocates have pressed Japan for a full and unequivocal accounting. They have met a familiar pattern: moments of apparent progress — the 1993 Kono statement acknowledging military involvement, the 2015 bilateral agreement with South Korea — followed by retreat. Japanese officials continue to dispute the term “sexual slavery.” Textbooks soften the language. Senior politicians visit Yasukuni Shrine, where convicted war criminals are honoured alongside the dead.

The symposium came as UNESCO’s World Heritage Committee convened in Busan, and the timing was deliberate. One of the gathering’s stated goals was to revive the push to have comfort women records inscribed on UNESCO’s Memory of the World register — an effort Japan has repeatedly blocked.

“Our aim is to reaffirm the historical facts of comfort women (受害) to the international community and explore directions that contribute to peace and human rights,” said Yu Ying-mo, senior adviser to the Carter Human Rights Center’s Asia region, in remarks prepared for the event.

A statue, a warning

The symposium also addressed an incident that has become a diplomatic flashpoint: the recent removal of a comfort women memorial statue in Taiwan.

The statue, one of dozens erected across East Asia and beyond, was taken down in recent months. Organisers in Busan described the removal as “an erroneous approach that erases historical wounds and weakens collective memory,” according to the symposium’s programme.

For advocates, the Taiwan case illustrates what happens when political pressure is allowed to dictate historical memory. “Statues, memorial halls, and archives related to comfort women are important spaces of memory that testify to the victims’ suffering and history,” the Carter Human Rights Center said in its written address. “They must be respected.”

Dozens of comfort women memorials now stand in cities from Seoul to San Francisco to Berlin. Each has become a site of diplomatic friction: Japan’s government has consistently objected to them, arguing they perpetuate what it calls an inaccurate narrative.

The shrinking window

Time is running out. Of the few hundred women who came forward in the 1990s, the number of surviving registered victims in South Korea has dwindled to single digits.

This demographic reality has injected new urgency into the preservation effort. Shim Ok-ju, a research professor at George Mason University Korea, told the symposium that the focus must now shift from oral testimony — soon to be lost — to documentation and education.

Seo Kyung-soon, a professor at Pukyong National University, presented findings from the so-called “Gwanbu Trial” records — a series of postwar legal proceedings in which comfort women sought compensation through Japanese courts. The documents, she argued, contain incontrovertible evidence of state orchestration.

A designated discussant panel followed, bringing together Kim Tae-wan, a political science professor at Dong-eui University; Kim Kyung-hee, an independent researcher; and Ahn Jun-young, a journalist from the Busan Ilbo newspaper. The format was designed to bridge academia and public consciousness — to test whether scholarly findings could survive the scrutiny of working journalists and political scientists.

The international dimension

The comfort women issue has never been purely bilateral. In 1996, the UN Special Rapporteur on violence against women concluded that the system constituted “military sexual slavery.” In 2022, the UN Committee on the Elimination of Discrimination against Women urged Japan to “ensure that the issue is accurately reflected in school curricula.”

Yet the gap between international consensus and Japanese government policy remains wide. Prime ministerial statements offer “apologies and remorse” but stop short of accepting legal responsibility. Reparations have come from private funds, not the state.

For organisers of the Busan symposium, the path forward runs through multilateral institutions. UNESCO recognition, they argue, would make historical revisionism harder to sustain. But Japan has made clear it will oppose any such move, as it did when Chinese documents related to the 1937 Nanjing Massacre were inscribed in 2015.

“Facing history squarely and respecting it is a fundamental value that the international community should share,” the symposium’s organisers concluded.

This 15 August, as Japan observes its National Memorial Service for the War Dead, the women who survived — and those who did not — will be remembered in rooms like the one in Busan. Their numbers are dwindling. The question is whether their story will outlast them.

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The U.S. Economy and NATO’s Function

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Although the U.S. President Trump has repeatedly told his counterparts and the rest of the world to “trade with the United States” and “invest in the United States,” he has so far failed to get the results he hoped for. There are several reasons for this.

First, the United States is no longer as attractive as it once was. Second, China, America’s biggest rival, stands out as a more attractive country for production and investment not only for the rest of the world but also for major U.S. companies themselves. This is because the United States simply cannot compete with China when it comes to production costs. China produces far more, at much lower cost. Moreover, it produces high-quality goods and is rapidly building global brands. For this reason, President Trump’s call on U.S. companies to dismantle their factories in China and relocate them to the United States has also failed to generate the response he expected.

Trump has repeatedly called on European entrepreneurs, investors, and business leaders to invest in the United States as well. “Build your factories in the United States. We will offer you the most favorable and lowest tax rates in the world. Otherwise, you will continue to pay high tariffs. In fact, we will raise those tariffs even further,” he said. It was virtually a threat. Yet despite this, he failed to attract the level of interest he expected from Europeans either.

It is impossible for this picture regarding the economy, trade, and tariffs not to have repercussions for politics and foreign policy. Therefore, when the United States fails to receive the response it expects to its economic invitations and trade proposals, it increasingly resorts to political pressure and foreign-policy threats. On NATO, Trump scolds his European allies. He pressures Europeans to contribute more to NATO. At times, he goes even further, virtually threatening them by saying that the United States could withdraw from NATO. Europe’s leaders, each more miserable and ignorant than the next, sit beside the U.S. president and swallow his insults. Sometimes they even applaud him.

WOULD THE UNITED STATES LEAVE NATO?

The United States will not leave NATO. Having used NATO very effectively, invested so heavily in the alliance, and gained enormous influence through NATO over its allies’ domestic and foreign policies—from their economies to their defense and security policies—the United States will not give it up. If the United States were to leave NATO, the alliance would lose its current meaning, effectiveness, and deterrent power. No NATO member could fill the vacuum left by the United States. Alongside America’s political, economic, military, industrial, and technological weight, it should also be remembered that the United States covers 14.9 percent of NATO’s common budget and accounts for 57 percent of total defense spending within the alliance.

We know that NATO’s European members have neither the strength, courage, political will, nor money to stand up to the United States in pursuit of a “more European NATO.” Nor is there any consensus among them in this regard. The idea of a European defense and security identity that is at least somewhat distinct and autonomous from NATO, occasionally championed by Germany and France, should not be taken too seriously either. Berlin and Paris have failed to persuade NATO’s other European members on this issue. Groups such as the European Political Community, which was brought to the agenda after the Ukraine-Russia war in an effort to also bring in countries such as Turkey and Britain, which are NATO members but not EU members, likewise have little function, influence, or weight.

A few years ago, President Trump demanded that NATO members raise defense spending from 2 percent to 5 percent of GDP by 2035. There was no serious objection to this demand. This alone is one indication that NATO is important to the United States not only politically and militarily but economically as well. America’s influence within NATO also benefits the U.S. arms industry, the largest in the world.

Because Trump wants to turn the United States once again into the world’s foremost manufacturing hub, increase exports, and attract more investment into the country, the defense industry is also of great importance within this broader agenda. Since lowering energy costs is essential to achieving this, Trump both sidelines environmentalist energy projects at home and, as in the case of Venezuela, abducts the leader of an energy-rich country and virtually seizes control of its energy resources. Trump knows that otherwise the United States will struggle to compete with China, and that it is impossible for America to produce more, produce more cheaply, and sell more than China, which is far ahead of the United States in global manufacturing.

That is why, as was once again evident at the NATO summit held in Turkey, discussions within NATO about strategic threats and deterrence, regional security and energy corridors, partnerships and global networks all ultimately serve U.S. priorities and interests. Whether this is explained in terms of geopolitical balances, economic interests, regional dynamics, security needs, diplomatic pressure, or all of these factors combined, NATO is an instrument of aggression and occupation serving U.S. imperialism.

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China Is Not Pulling Up the Industrialization Ladder

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A recent Peterson Institute for International Economics paper advances what it calls the “China Squeeze.” It argues that China, despite moving into more advanced industries, has not withdrawn from labor-intensive sectors. By continuing to compete in these markets, the paper claims, China is blocking poorer countries from following the traditional path to industrialization. It accuse China for climbing the development ladder and then pulling it up.

This argument misreads how industrial development and production relocation actually work. It treats China as a single, economically homogeneous country and overlooks the infrastructure, supply chains and market access that industrialization requires.

It assume that as Chinese wages rise, China should vacate traditional industries and make room for poorer economies. If it does not, it is supposedly trying to “retain comparative advantage in everything.”

But China is not composed only of Shanghai, Shenzhen and other prosperous coastal cities. It also has a vast interior, a large population and enormous regional differences in wages, land costs, industrial structures and stages of development. When manufacturing moves from Guangdong, Zhejiang or Jiangsu to Anhui, Jiangxi, Hubei or Sichuan, the economic logic is not fundamentally different from a factory moving from China to Vietnam or Indonesia. Both represent the relocation of production in response to changing costs and capabilities.

China’s internal development gap means that the entire country cannot be expected to exit an industry simultaneously. Ignoring domestic industrial relocation while focusing exclusively on production crossing national borders makes China’s continued presence in traditional manufacturing appear far more anomalous than it is.

The “China Squeeze” argument also understates the scale of China’s outward industrial relocation. A growing number of developing economies import Chinese machinery and components, process or assemble them locally, and then export finished goods to the United States, Europe and other markets. Like what McKinsey describes in its report, China’s changing role as a shift from the “factory of the world” to a “factory to the factories.” In 2025, China’s exports of consumer goods declined by about 2 percent. Its exports of intermediate goods, however, rose by 9 percent, while capital-goods exports increased by 5 percent. The fastest-growing categories included semiconductors, memory chips, lithium-ion batteries, smartphone components and industrial machinery.

In other words, China increasingly exports not only products for final consumption but also the equipment and inputs that allow manufacturing to expand elsewhere. In many emerging supply chains, China supplies machinery and components while developing economies take on assembly, processing and other stages of production.

This does not mean that there’s no competition. It means that the relationship cannot be reduced to the proposition that every additional product made in China is one fewer product made elsewhere. Developing economies can be both competitors with China and participants in production networks supported by Chinese inputs.

The deeper problem with the “China Squeeze” theory is that it ignored the fundamental elements for industrial transfer to happen. Export performance also depends on productivity, electricity supply, port efficiency, financing costs, supplier networks, industrial clusters, technology and local governance.

A factory leaving China does not means it will reappear in Bangladesh or Tanzania. Production relocation requires reliable electricity, functioning roads and ports, a basically educated workforce, effective customs administration and a reasonably predictable investment environment, These were precisely the conditions that China possessed on the eve of reform and opening-up.

Industrial clusters also generate powerful economies of scale. A garment factory needs nearby suppliers of fabric, dyes, buttons, zippers and packaging, as well as efficient logistics. An electronics plant depends on chips, screens, batteries, molds and precision components. Moving a factory to the country with the lowest wages does not necessarily produce the lowest overall costs. Wages are only one part of the equation; a functioning industrial ecosystem is often more important.

Seen from this perspective, one of the Belt and Road Initiative’s most important contributions has been to help developing economies build the conditions needed to receive industrial investment. Ports, roads, railways, power plants and communications networks are not incidental to industrialization. They are what make industrialization possible.

Industrial capacity must also be connected to consumer markets. Here, too, China is moving in a direction that the “China Squeeze” narrative overlooks. Since May 1, 2026, China has applied zero tariffs across all tariff lines to imports from all 53 African countries with which it maintains diplomatic relations.

The significance goes beyond increasing African exports of commodities and agricultural products. Combined with Chinese infrastructure, investment and industrial parks, greater access to the Chinese market could encourage more goods to be processed and manufactured in Africa before export—creating local employment, value added and productive capacity. China should now complement tariff removal with simpler customs, inspection and certification procedures so that African producers can make full use of this access.

Competition is real, but industrialization is not a zero-sum game and China is not pulling up the industrialization ladder. The “China Squeeze” thesis counts the competitive pressure created by Chinese exports while largely ignoring the opportunities created by Chinese investment, infrastructure, intermediate goods and market access.

 

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