Opinion | How progress, not just profit, drives China’s approach to industry

In a tense election year for the United States, Secretary of State Antony Blinken criticised Chinese non-market practices during a recent visit to China, amid suggestions of further tariffs on Chinese products ranging from electric vehicles to metals.

In the view of the US, China’s expanding industrial capabilities could spell disaster for international markets, and Chinese overproduction might undermine the very foundations of economies around the world. Yet, through a different lens, what the US decries as overcapacity might instead be seen as the fruit of foresight, efficiency and an unerring commitment to scale.

Key metrics indicate Washington’s allegations of overcapacity against China may be more fear than reality. China’s industrial capacity utilisation rate is 73.6 per cent, comparable to the US’ 78.4 per cent. In terms of inventory levels, China’s index stood at 49 in March, similar to the US’ 48. Meanwhile, Chinese new export orders rose to 51.3 per cent in March, as China’s industrial profits continue to grow.

Never mind the threat of more tariffs: China’s ability to compete on cost makes it resilient to such international pressure. As its industries continue to offer products at prices too competitive for global markets to resist, even increased tariffs are unlikely to slow China’s economic engine.

China’s strategy, marked by significant investments in technology and infrastructure, reflects not just an ambition to lead but also a philosophical departure from the Western emphasis on profitability. From this perspective, China’s industrial capacity should be understood not as overcapacity, but as a strategic outcompeting of the US in scale, cost and efficiency.

The story here is not just simple economic rivalry, but rather the deep differences in how the two nations view progress and prosperity. In contrast to the US’ focus on profit-driven innovation, China embraces widespread adoption, prioritising long-term dominance through cost leadership.


Chinese EV maker BYD launches electric cars in Indonesia

Chinese EV maker BYD launches electric cars in Indonesia

Consider how Xiaomi’s low-margin, high-volume strategy contrasts with Apple’s high-margin products. A similar strategic dichotomy can be observed in the electric vehicle and e-commerce sectors, whether it’s BYD versus Tesla, or JD.com versus Amazon.
By prioritising widespread adoption over immediate profits, China is playing the long game – a strategy that aligns with its historical approach to growth and unique position in the global economic arena. This ethos extends to hi-tech and green energy, where China’s innovative leadership redefines market success, with the support of a sophisticated workforce, as attested by Apple’s Tim Cook, who also exploded the myth of inexpensive Chinese labour.

The depth, breadth and sophistication of China’s supply chain infrastructure is often severely underestimated, such as the extensive vertical integration and advanced automation that make it possible for Xiaomi to produce a SU7 car every 76 seconds.

Moreover, substantial investments in renewables not only stabilise energy costs but also afford China a 50 per cent cost advantage over Western power rates, thus laying a foundation for China’s expansive growth across vital industries.

An employee works at a factory that produces charging stations for electric cars in Ruichang, Jiangxi province, on April 17. Photo: AFP

Where Western critics see a dangerous game of economic brinkmanship, those in China see a necessary evolution towards a future where dominance is defined not by the size of one’s economy alone, but by the ability to steer the global community towards the frontiers of more sustainable and equitable technology.

In the face of Blinken’s criticism of overcapacity, there is a way for China to rise above this debate: out-innovating its peers. By doubling down on technological advancements while bolstering research and development, China can shift the conversation from mere quantity to undeniable quality.

Historical parallels can be drawn from the US-Japan trade tensions of the 1970s and 1980s when Japan faced accusations of overcapacity in electronics and automotive sectors. Toyota pioneered the Toyota Production System, championing lean manufacturing principles that emphasised efficiency and continuous improvement.

This approach not only set global benchmarks for manufacturing excellence but also offers a blueprint for how China can navigate similar challenges today.

Emulating this model, China is forging ahead in its quest for technological self-sufficiency, reportedly leading in 37 out of 44 critical technologies. Its semiconductor output jumped 40 per cent in the first quarter, driven by demand from new energy vehicles and smartphones, setting China on a path to dominate global chip production. Additionally, Chinese drug makers’ US$45 billion in international licensing deals last year reinforces China’s role as a vital market, supplier and innovation hub.


China’s largest photothermal power facility drives development of new form of energy

China’s largest photothermal power facility drives development of new form of energy

Amid these seismic shifts, global consumers and the planet stand to be the ultimate beneficiaries of this grand strategic contest. The widespread adoption of competitively priced electric vehicles, solar panels and advanced batteries not only heralds a greener future but also signifies hope in our ongoing climate struggle. This push for scale and efficiency promises technology that is more accessible and meets urgent needs.

However, protectionist narratives threaten to disrupt supply chains and stall these crucial green transitions. Moreover, decoupling from Chinese clean tech could inflate global energy transition costs by 20 per cent, adding US$6 trillion to the already substantial US$29 trillion required for net-zero emissions by 2050.

Through this lens, China’s approach to technological and industrial expansion embodies more than economic strategy; it reflects a deeply-rooted philosophical stance on progress and prosperity, not viewing the future as a destination but as an impactful journey for humanity.

At this critical juncture, the role of global leaders and innovators transcends competition. It demands a profound understanding of the deeper currents shaping our world and recognising the pursuit of short-term gains pales in comparison to the lasting legacy of global sustainable development.

Jeffrey Wu is a director at MindWorks Capital, a leading Hong Kong-headquartered venture capital firm specialising in technology investment across Greater China and Southeast Asia

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