article inspired by the analysis of the Chinese economist Keyu Jin
For decades, the world was used to the same label affixed to almost every everyday object: Made in China. From phones and clothes to appliances and toys, those three words created a simple and seemingly logical story: China became “the factory of the world,” stole jobs, accumulated wealth, and destabilized Western economies.
But this story, though tempting, is — for the most part — false. Or, more precisely, it is outdated and profoundly incomplete.
To truly understand China’s role in the global economy, we must look not at the label but at the global value chain.
The iPhone case: the anatomy of an illusion
More than a decade ago, when an iPhone was assembled in a factory in China and exported to the United States for a price of roughly $500, the entire value was accounted for as a “Chinese export.”
This accounting detail artificially inflated the U.S. trade deficit with China and fueled political rhetoric against Beijing.
In reality, however, in 2009 China kept only about $1.30 of the total value of each phone.
The rest of the money went to:
- Japan — screens and optical components
- South Korea — memory chips
- Germany — sensors and accelerometers
- The United States — design, software, patents, branding (almost 60% of the value)
China was not the “owner” of the product, but the last link in a global production chain. Its role was primarily to assemble, to bear the pollution, repetitive labor and minimal margins — for a negligible gain relative to the total value.
This is the essence of the global value chain concept. Where a product is made is not necessarily where value is created.
China did not dominate the chain. It climbed it.
The real change — the point the West ignores or underestimates — is that China understood this mechanism and acted strategically.
Instead of resigning itself to the role of the “cheap workshop of the world,” China triggered a profound transformation:
- it began producing batteries
- it developed its own screens
- it created its own software ecosystems
- it invested massively in research and technological education
Thus, by 2018, the value captured by China from the same type of iPhone had risen to over $10 per unit — an increase of more than 800%.
Moreover, for domestic brands like Huawei or Xiaomi, China now controls almost the entire production chain: from concept and design to components and software.
The label “Made in China” has therefore become a misleading simplification. The world no longer lives in a “Made in China” economy, but in a “Made in the World” economy — with a center of gravity that is shifting rapidly toward Asia.
“China Shock”: half truth, half excuse
It is often said that China’s rise destroyed the American middle class. There is a grain of truth: between 1999 and 2011, about 2.4 million jobs in the United States disappeared amid cheap imports.
Industrial towns emptied. factories closed. Entire communities were affected.
But this narrative ignores another reality: trade with China simultaneously created millions of jobs in other sectors of the American economy:
- agriculture (soy, corn, meat)
- energy
- technology
- logistics
- semiconductors
- marketing and design
In 2015, U.S. exports to China supported over 1.2 million jobs directly. To these add other millions indirectly generated by lower costs for companies and consumers.
The real problem was not the loss of value, but the unequal distribution of gains:
- Wall Street and Silicon Valley prospered
- traditional industrial areas were abandoned
This was a problem of domestic policies, not a failure of globalization itself.
China — the new “training ground” of the global economy
Perhaps the most counterintuitive reality is this: Although politicians talk about decoupling, and the press about Western companies withdrawing, in reality investments in China continue and even grow.
Tesla, Apple, BASF, Siemens and other global giants are consolidating their presence in China.
Why? China has become an ecosystem of extreme competition. A kind of gym for the world economy:
- very demanding consumers
- ferocious local competition
- rapid innovation
- unique speed of adaptation
If you succeed in China, you can succeed anywhere.
Tesla manufactures its most efficient models in Shanghai. Starbucks was forced, in China, to become a tech company, not just a coffee company.
Those who leave China do not just lose a market. They lose access to the most intensive zone of innovation in the world.
From cheap goods to cutting-edge technology
For the first time in modern history, China no longer competes with poor countries. Competition is now with Germany, Japan and the United States in high-precision fields:
- industrial machines
- tunnels, infrastructure
- electric vehicles
- batteries
- artificial intelligence
- medical equipment
China has become a net exporter of advanced technology, not just a mass manufacturer. This is the real reason for today’s global tensions: not fear of cheap products, but fear of losing technological supremacy.
Conclusion: the end of a simple world
The label “Made in China” belongs to the past. Today’s world is far more complex, interdependence is deep, and a total rupture would cause an unprecedented economic collapse.
The real question for the West is no longer:
“How do we disentangle from China?”
but
“How do we compete with a China that no longer merely assembles the world, but redesigns it?”
The $1.30-per-product era is over. The era of creation, control and innovation has begun.
And this is only the beginning.
