China’s Industrial Pivot: From Localization to Global Value Chain Dominance

Beijing is entering a 'next-generation' phase of industrial policy that shifts focus from domestic substitution to systemic control over global supply chains. By leveraging state power to entrench dominance in upstream inputs and downstream applications, China is creating a new era of global trade friction and deep foreign dependency.

Rhg: China’s Next-Generation Industrial Policy (6 days ago)

A decade after the launch of 'Made in China 2025,' Beijing is doubling down on state intervention rather than retreating under international pressure [1]. This new phase of industrial policy is significantly more systemic, extending beyond finished goods to include the entire production stack—from raw materials and industrial equipment to frontier services [1]. This shift reflects a sophisticated evolution in The Rise of Global Capitalism, where the state actively shapes value chains to ensure long-term structural advantages.

Evidence of this 'China Shock 2.0' is most visible in the rare earth and green technology sectors, where Beijing uses state power to tighten its grip on global supply [2][4]. Unlike previous cycles focused on domestic market insulation, the current strategy aims to make the world more dependent on Chinese exports while simultaneously building internal self-reliance [1]. This dual-track approach mirrors the mechanics of capital accumulation and state-directed outcomes often explored when Deciphering Karl Marx's 'Das Kapital', particularly regarding how state intervention can distort traditional market-oriented competition.

The global impact is already manifesting in export pricing shifts and the 'Buy in China' phenomenon, as firms are increasingly forced to integrate into Chinese ecosystems to remain competitive [3]. While China still faces gaps in high-end semiconductors and aerospace, its success in displacing foreign firms in new energy vehicles and communications equipment has been striking [1]. This aggressive industrial posture is a core driver of geoeconomic fragmentation, as major manufacturing powers like Germany, Japan, and the U.S. scramble to counter a competitor that operates with massive, coordinated state support [1][2].

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References

Rhg6 days agoChina’s Next-Generation Industrial Policy The Economic Times6 hours agoChina using state power to tighten global supply chain dominance: Report Table.Briefings3 days agoThe surprising shift in China’s export prices + What “Buy in China” means for businesses Rare Earth Exchanges4 days agoChina Shock 2.0 Is No Longer a Theory-It’s the Rare Earth Supply Chain Reality