A tale of two responses to China’s economic transformation

China’s economic integration is irreversible — whether it fuels prosperity or disruption depends on countries' capacity to adapt. China’s ascent over the past two decades has been both an engine of global prosperity and a source of disruption. Once the world’s factory for cheap consumer goods, China has transformed into a hub of innovation, fuelling commodity booms across Latin America and Africa and anchoring price stability in advanced economies. Yet China’s rise has also exposed weaknesses in Western policy responses to globalisation. China’s transformation did not happen by accident. It was propelled by ambitious state-led industrial policies such as Made in China 2025, which poured resources into industries like robotics, aerospace, green tech and biotechnology. Strategic overseas acquisitions and technology transfers helped build a full-spectrum production structure, giving China a comparative advantage across labour, capital and knowledge-intensive industries. But China’s transformation cannot be attributed solely to government direction. It also reflects the entrepreneurial drive of its people, who have thrived in a fiercely competitive domestic environment. From delivery workers to world-class entrepreneurs, China’s workforce has sustained innovation through its human capital and adaptability, despite policy shifts and geopolitical headwinds. The global effects of China’s economic transformation have been twofold.

Author summary: China’s rise reshapes global prosperity and disruption, driven by state-led policy and strong entrepreneurial drive, with lasting implications for international trade and geopolitics.

East Asia Forum — 2025-11-14

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