Reimagining industrial dynamics of Global South

Strategic bilateral engagement with China under the GDI framework propels Thailand's upward mobility within worldwide production systems

The so-called China squeeze narrative that China is "crowding out" industrial development space for other developing nations is a fabricated fallacy. On the contrary, China is empowering other Global South countries' development. For Thailand, China is an investor, a supplier of tech and raw materials, and simultaneously, a strategic partner.

Viewing global industry as a fixed pie doesn't capture the whole picture. Modern manufacturing isn't confined to a single country; it has fragmented into stages, from design and raw material sourcing to parts manufacturing, assembly, testing, logistics and after-sales service. This fragmentation allows different nations to carve out various roles within global value chains. China's own exports often include intermediate goods and electronic components, industrial materials and manufacturing gear.

According to China's General Administration of Customs, in 2025 China's imports and exports were growing with more than 190 countries and regions. Imports and exports with the Association of Southeast Asian Nations, Latin America and Africa reached 7.55 trillion yuan ($1.13 trillion), 3.93 trillion yuan and 2.49 trillion yuan respectively, growing by 8 percent, 6.5 percent and 18.4 percent. China's exports of high-tech products reached 5.25 trillion yuan, up 13.2 percent. Exports of green products such as the "new three items" and wind turbine generators grew by 27.1 percent and 48.7 percent respectively. Rather than just competing, these goods can actually serve as vital inputs that help other countries build or scale up their own manufacturing bases.

For Thailand, especially under the frameworks of the Global Development Initiative and the Belt and Road Initiative, ties with China are empowering the local economy and Thailand is providing China with various application scenarios and new consumer markets to achieve win-win cooperation. Thai businesses gain access to machinery, raw materials, components, and technology at highly competitive prices. This can lower startup costs and boost manufacturing capabilities in emerging sectors such as electric vehicles, electronics, clean energy and the digital economy. On the flip side, Thailand should gradually enhance its own industrial capability by learning from the experience of Chinese enterprises and taking governance lessons to avoid export restrictions, geopolitical friction or sudden shifts in technological standards set up by other major powers.

The EV industry perfectly highlights this complexity. The influx of Chinese EV makers has driven up investment, sparked price competition, and given consumers more choices. It also has the potential to draw parts manufacturers and support services into Thailand. But the actual benefit to the Thai economy boils down to whether these investments genuinely link up with local suppliers, create skilled jobs, foster R&D and transfer technology. If Thailand merely acts as an assembly hub or a final market, the lion's share of the value added will stay with foreign companies and their overseas headquarters.

The broader trend is clear: Thai-Chinese economic relations go far beyond trading finished goods. They now involve a fundamental restructuring of regional production bases and supply chains.

Regionally, ASEAN stands to gain from this diversification of production and a tighter division of labor. For instance, China might supply the components, machinery and raw materials, while countries such as Thailand, Vietnam and Malaysia handle specialized manufacturing, assembly, testing and re-exporting to third markets. Importing capital goods alongside FDI can help drive technological upgrades. However, this division of labor doesn't guarantee automatic economic advancement. Countries in labor-intensive or final-assembly stages need to set up their own development plan to upgrade this division of labor to move up their ranking in global value chains.

Thailand could set the right terms to turn its ties with China into industrial upgrade. Investment promotion policies need to aim higher than simply chasing dollar amounts. They should target specific goals: upskilling the Thai workforce, training engineers, establishing R&D centers, transferring know-how and opening doors for local SMEs to plug into these new supply chains.

Thailand also needs to keep its economic partnerships diverse, actively engaging with other nations via multilateral cooperation mechanisms such as the Asia-Pacific Economic Cooperation and the Regional Comprehensive Economic Partnership. Diversifying markets, tech sources and investment pools by expanding South-South cooperation can give Thailand more choices.

Ultimately, the misperception that China is "squeezing" other Global South countries assumes that the industrial landscape is static and that China and other Global South countries are locked in a perpetual zero-sum rivalry, which is quite contrary to the reality of win-win results brought about by Thailand-China partnership for years. For Thailand, China represents more than opportunities. China is a trusted friend that can empower its partner with infrastructure and knowledge. The smart path forward is that Thailand leverages smart industrial policies and human capital development to make the most of its partnership with China and take part in multilateral platforms to secure a higher-value role and greater integration into the global value chain.

The author is the director of the Institute of East Asian Studies at Thammasat University, Thailand.

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.