It is difficult to imagine today’s global economy without China. From smartphones and solar panels to electric-vehicle batteries and consumer goods, Chinese industrial capacity is now embedded in almost every corner of global supply chains.

Depending on the measurement, China accounts for roughly 17–19% of global GDP and about 28–30% of global manufacturing value added, making it the world’s largest manufacturing economy by output. It has become a leading exporter and a significant player in sectors such as electric vehicles, renewable energy, shipbuilding, and artificial intelligence.

That outcome was not accidental. Since the late 1970s, China has followed a sustained approach to develop human capital, infrastructure, energy, technology, and industrial capacity in a coordinated manner.

Human capital development has been a consistent priority. Education policies emphasized STEM, vocational training, and the creation of a skilled industrial workforce, producing large cohorts of engineering and science graduates annually and supporting outbound study that facilitates technology transfer. These investments helped shift the economy from low-cost assembly toward higher value-added manufacturing and technology adoption.
 
China also invested heavily in infrastructure and energy at scale. Ports, highways, high-speed rail, power generation, telecom networks, and industrial zones were developed across the country with the aim of reducing logistics costs and improving connectivity -- measures that supported industrial expansion and regional integration. Infrastructure, energy, logistics, financing, and supplier networks were expanded in parallel to create an integrated industrial ecosystem.
 
A third element is active industrial policy and policy coordination. Special economic zones, targeted incentives, state-backed financing, and managed technology transfer were among the tools used to support sectors regarded as strategically important, creating an environment that facilitated rapid industrial scaling. This combination of market mechanisms and state direction differs from development approaches that rely primarily on market forces.

China’s experience suggests that the debate between the state and the market is rarely black-and-white. Markets remain essential for efficiency, innovation, entrepreneurship, and competition. Yet during certain phases of economic transformation, the state can also play a strategic role in building infrastructure, reducing coordination failures, setting industrial priorities, and providing long-term policy direction. The challenge, of course, lies in ensuring that state intervention strengthens productivity and competitiveness rather than creating distortions that weaken them.
 
Fourth, China’s integration into global trade -- notably after its WTO accession in 2001 -- changed the country’s engagement with the global economy. Accession involved lengthy negotiations, and China subsequently used the global trading system to expand market access, attract investment, and accelerate technology adoption, which in turn elevated its position in global supply chains.

Nevertheless, China’s rise presents trade-offs and prompts international concerns. Securing access to resources, markets, and supply chains can appear strategic, and the scale of state support raises questions about fair competition, market access, and debt exposure in partner countries. These are not novel issues -- other rising industrial economies pursued similar strategies historically -- Europe between the 17th and 19th  centuries, the United States in the post-World War II era, and Japan in the 1970s and 1980s.
 
China also faces domestic and external constraints that may affect its future trajectory. These include demographic shifts such as an aging population, rising labor costs, increased geopolitical tensions, tariff barriers and technology restrictions, and global efforts to diversify supply chains -- factors that could alter growth dynamics in the coming years.

The broader lesson for policymakers in developing countries is practical rather than prescriptive: large-scale industrial upgrading typically requires long-term investments in human capital, infrastructure, and institutions, coupled with policy coordination. Observing China’s experience can offer ideas and cautionary points -- both about what can be achieved and about the governance, strategic, and international consequences that may follow.

In that context, debates about the role of the state and the market may be more productive when viewed not as rigid ideological opposites, but as questions of how both can complement one another in strengthening long-term productive capacity and economic resilience.

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Iman Pambagyo is the Trade Ministry’s Director General of International Trade Negotiations (2012-2014, 2016-2020) and Indonesia’s Ambassador to the WTO (2014-2015). The views expressed in this article are those of the author.