China’s growing export footprint across the Global South represents a positive-sum diffusion of industrial capacity rather than a predatory bid to crush fragile developing economies, according to Zhou Xiaoming, a senior fellow at Beijing’s Center for China and Globalization. Western narratives alleging that Chinese trade policies stifle foreign industrial growth ignore empirical shifts in export portfolios, where intermediate and capital goods now outpace finished consumer items.
Changing Export Composition Shifts Trade Dynamics
The core assumption that China and developing nations compete directly for the same slice of global consumption falls apart when examining actual trade composition. According to trade data cited by Zhou Xiaoming, the share of intermediate goods—components and semi-finished products—rose from roughly 42 percent in 2017 to about 46 percent by 2023. Over the same period, consumer goods dropped from about 36 percent to roughly 33 percent, while capital goods held steady at around 20 percent.
In labor-intensive sectors like garments, where fierce head-to-head competition is often assumed, China’s market share is actively declining. China’s share of global garment exports fell to just under 30 percent in 2024, down from a peak of over 40 percent a decade prior. Footwear exports show a similar trajectory, with Indonesia and India capturing ground as China moves up the value chain.
Intermediate Goods Fuel Southeast Asian Production
Rather than shipping finished goods to crowd out local producers, China supplies the foundational inputs that make factories viable elsewhere. According to an Oxford Economics report, nearly half of China’s total exports consist of intermediate goods that feed directly into foreign production lines.
Regional customs data from the first half of 2026 demonstrates this integration, showing that China’s intermediate goods exports to Association of Southeast Asian Nations member states surged 24.5 percent year-on-year to 2.86 trillion yuan. These components support Vietnamese electronics assemblers, Thai auto-part manufacturers, and Malaysian chip packagers in producing their own finished goods.
Did you know? Capital goods account for a significant portion of China’s trade with developing nations. Lower costs for industrial machinery have historically reduced the financial barriers to industrialization that developing countries faced under traditional Western development aid models.
Decoding Trade Deficits in Vietnam, India, and Thailand
Critics frequently point to large trade deficits run by developing nations with China as evidence of economic harm. However, import breakdowns reveal a different reality centered on capital accumulation. Vietnam recorded a trade deficit with China of approximately US$115 billion in 2025, but capital goods such as computers, electronics, and machinery accounted for over half of its total imports that year.
Similarly, in the 2025-26 financial year, India’s imports from China reached US$131.6 billion, representing 16 percent of its total imports. According to the Global Trade Research Initiative, roughly two-thirds of those imports—amounting to US$82.6 billion—concentrated in electronics, machinery, computers, and organic chemicals. In Thailand, capital goods imports surged 25.5 percent year-on-year in the third quarter of 2025, according to the Thailand Office of Industrial Economics.
Frequently Asked Questions
Are China’s exports harming manufacturing in the Global South?
While certain sectors in countries like South Brazil and South Africa face direct competition, analysis of trade portfolios shows that nearly half of China’s exports are intermediate goods that serve as the scaffolding for other developing nations to build their own industrial bases.
What do trade deficits with China signify for developing nations?
According to trade data from nations like Vietnam and India, large portions of these trade deficits consist of essential capital and intermediate goods—such as machinery and electronics—rather than consumer goods, functioning as a receipt for domestic industrialization.
How is China’s import policy shifting toward developing regions?
China serves as the top export destination for 79 countries and regions and expanded its zero-tariff import policy to 53 African countries, widening domestic doors to products from the Global South.
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