Beijing - First came "China shock." Then followed "Chinese overcapacity." Now, some Western agitators have invented a new label: "China Squeeze."

A May 2026 paper from the Peterson Institute for International Economics argues that China's strength in labor-intensive manufacturing is narrowing the path to industrialization for poorer countries, highlighting competition from Chinese goods in the global and emerging markets and the foreign access to Chinese consumers. The narrative turns industrialization into a game of musical chairs: If China keeps its seat, another country must go without one.

That mistakes market share for proof of exclusion, competitiveness for misconduct, and division of labor in global supply chains for a contest among self-contained economies.

The first mistake is the counterfactual. If China exported less, would developing countries necessarily export more?

A shirt not made in China would therefore not automatically be made in the poorest available country. It might be produced in another established manufacturing center, made with more automation or not sold at the same price.

The "squeeze" narrative also weighs competition more than demand. China exports manufactured goods while importing large quantities of commodities, agricultural products and components. Its machinery and equipment can lower production costs elsewhere, while robust Chinese demand sustains imports from around the world.

A 2025 International Monetary Fund study found that China has made significant contributions to global economic growth and spillovers. Trade among developing economies has expanded fast, as South-South trade has surged tenfold over the past three decades and now accounts for more than one-third of global commerce, UN Trade and Development reported in 2025.

The second mistake is to treat Chinese commercial success as evidence of unfair trade.

Germany built an advantage in cars, Japan in machinery, South Korea in memory chips and the United States in aerospace, pharmaceuticals and software. Their success rested on the combination of technologies, skilled labor, industrial scale, policy and supplier networks. Competition eliminates inferior production capacity, encouraging enterprises to improve efficiency and innovation, but does not mean depriving other countries of the right to industrialize.

China's manufacturing strength also has identifiable foundations. Decades of investment in infrastructure, research, engineering and education have created dense industrial clusters in which manufacturers, suppliers and skilled workers reinforce one another. Scale reduces costs, while intense domestic competition speeds up innovation.

In 2025, China led the world in patent filings, according to data from the World Intellectual Property Organization.

A standard under which low prices imply dumping, large production implies overcapacity and export success implies a threat would make competitiveness itself an offense.

The third mistake is to regard industrialization as a ladder that countries climb one at a time. Actually, modern production works more like a network.

A car may use minerals from one country, batteries from another, chips from a third and software from a fourth. Global value chains allow developing economies to enter an industry through components, assembly or services without first building an entire production system, according to a World Bank report.

Southeast Asia's electric vehicle industry shows this process at work. Chinese companies are moving beyond selling cars in the region to investing in assembly, batteries, parts and local supplier networks.

Several major Chinese electric vehicle manufacturers were already operating or building plants in Thailand, according to the Thailand Board of Investment.

New factories and supplier links show industrial capacity spreading across borders, not a ladder being pulled up.

The same principle applies to emerging technologies. At the 2026 World Artificial Intelligence Conference, China announced 5,000 AI training opportunities for developing countries over five years and an AI-powered weather-warning system for 30 countries.

China's rise brings demand, investment and technology. Industrialization is not a fixed prize to be divided, but a capacity to be built -- and open economic networks leave more room to build it than closed blocs do.