Examining the Rise of China's Industry from a Broader Perspective

As China continues to upgrade its manufacturing base and expand production across various sectors, from electric vehicles (EVs) to renewable energy equipment, some Western countries are reviving accusations of Chinese ‘overcapacity’ to justify new tariffs and investment restrictions. Yet, these latest accusations go beyond production capacity, reflecting growing concerns in some economies about industrial competitiveness and market position. The broader issue is how capacity, competition, and cooperation should be viewed amid technological change and global supply chain restructuring. Without a universally accepted definition, the concept of overcapacity has become a convenient tool for some politicians to politicise economic and trade issues, using China’s subsidies, trade surplus, and export volumes as indicators of ‘unfair’ competition and ‘overcapacity’.

China possesses the world’s largest and most comprehensive manufacturing system, enabling it to efficiently supply a wide range of industrial products on a large scale. A Chinese commerce ministry official, He Shaojun, noted that China’s trade surplus reflects the completeness and efficiency of its industrial system and is an objective result of changes in global specialisation and trade patterns. For many observers outside China, the country’s industrial rise is often measured by the rapid growth of industries such as artificial intelligence, electric vehicles, and advanced batteries. Behind this current competitiveness lie decades of investment in research and development, the advantages of a vast domestic market, a comprehensive industrial ecosystem, and sustained market-oriented reforms. Although some countries are reviving the old narrative that China’s industrial development is driven by government subsidies, these industries are the result of technological accumulation, industrial upgrading, and continuous innovation, not merely short-term policy support.

This manufacturing capacity plays a crucial role in stabilising global supply, helping to address shortages in various regions caused by protectionism, geopolitical tensions, and other disruptions, while serving as a key pillar of global industrial and supply chains. More importantly, China’s industrial upgrading has created opportunities that extend far beyond its borders. Foreign-invested enterprises, global suppliers, and consumers have all benefited from China’s integration into international production and trade networks. At the same time, rising domestic demand in China, driven by consumption upgrades, the green transition, and digital infrastructure investment, generates sustained demand for products, technologies, and services from around the world. Over the past decade, China has contributed roughly 30 percent to global economic growth, serving as a vital source of stability for the world economy. China supplies over 80 percent of the world’s photovoltaic modules and 70 percent of wind power equipment, providing essential support for the green transition of its trading partners. Foreign-invested enterprises account for 16 percent of China’s trade surplus, earning significant returns on their investments.

This broader perspective is often overlooked in discussions about so-called ‘overcapacity’. For many developing countries, China’s cost-effective product supply means greater access to technology, equipment, and industrial knowledge. China’s exports of high-quality, affordable components and production equipment have lowered the barriers to industrialisation for many developing nations. Between 2012 and 2024, China exported more than 30 billion US dollars’ worth of textile machinery to developing countries, helping economies in Southeast Asia and South Asia expand their textile manufacturing capacity and become major producers and exporters of textile products. Through the Belt and Road Initiative, technology-sharing platforms like the Luban Workshops, and the provision of affordable renewable energy products, China seeks to strengthen the capacity of developing countries to build their own sustainable industries. These efforts aim to promote self-reliant and sustainable growth by lowering industrialisation barriers, enhancing technical capabilities, and expanding participation in global value chains. A commerce ministry official, Han Yong, stated that instead of using industrial policy as an instrument to restrict the development of other countries, all nations should focus on expanding global development opportunities through reasonable, transparent, and rules-based industrial policies. He added that China is ready to work with all parties within the World Trade Organisation framework to strengthen dialogue on industrial policy, improve related practices, and advance multilateral trade rules to align with evolving economic realities.