In recent years, the global landscape has been undergoing complex and profound changes with significantly increased instability and uncertainty. The rise of unilateralism and protectionism, advancements in digital and intelligent technologies, the green and low-carbon transition and the collective rise of the Global South present both opportunities and challenges for industrialization across the Global South.

In 2024, the world saw the introduction of more than 1,200 discriminatory trade barriers, far surpassing the pre-pandemic annual average of just over 200. Some developed countries have adopted measures to promote on-shoring, near-shoring and friend-shoring, which have disrupted global industry and supply chains. This has negatively affected the trade and foreign investment flows into Global South countries. Although some countries may seize short-term opportunities of industrial relocation amid geopolitical realignments, the highly uncertain international economic environment will, in the long run, consistently impact trade stability and further disrupt investment, hindering the industrialization of most Global South countries.

Digital and intelligent technologies have given rise to new business forms and models, which can help enterprises in the Global South connect to broader markets and increase the added value of their products. Big data and cloud computing can help them improve production processes, optimize resource allocation and enhance production efficiency and quality. However, the development and application of digital and intelligent technologies are also pushing some traditional labor-intensive industries, such as textiles, toward becoming more capital- and technology-intensive. Between 2016 and 2023, the density of robots adopted in the global manufacturing industry increased rapidly from 74 to 162 robots per 10,000 employees. As a result, the traditional comparative advantage of large-scale, low-cost labor in Global South countries may be diminished.

The global green and low-carbon transition has led to a significant increase in demand for critical minerals such as lithium, copper, chromium, nickel and rare earth elements. Some Global South countries with abundant critical mineral resources have gained opportunities to advance deeper processing of mineral products. The International Monetary Fund predicts that sub-Saharan Africa holds 30 percent of the world’s critical minerals. By 2050, mineral extraction will boost the region’s GDP by over 12 percent. Technological innovation and application in the green sector have also made it possible for Global South countries to pursue a path of green industrialization. However, Global South countries still lack sufficient funding and skilled talents to develop and utilize key green technologies, as well as adequate capacity for developing clean energy projects.

In current US dollar terms, the Global South’s share of the world economy has risen from about 20 percent in 2000 to about 40 percent in 2024. Some Global South countries are increasingly becoming major consumer markets for industrial products and key sources of industrial investment for other Global South countries. Emerging economies, especially the BRICS countries, have become vital nodes in global industrial and supply chains. New mechanisms and platforms for development cooperation in the Global South — such as the BRICS cooperation mechanism, the African Union’s Agenda 2063, the Global Development Initiative and the Association of Southeast Asian Nations Community Vision 2045 — are fostering new opportunities for industrialization in Global South countries.

In such a global landscape, advancing industrialization is beneficial for Global South countries to enhance their economic autonomy and develop endogenous driving forces, better cope with turbulent and changing external environments, and provide more stability and certainty for global development. Promoting the industrialization of Global South countries can be approached in the following aspects.

First, based on their resource endowments, industrial capacity, labor conditions and cultural characteristics, Global South countries need to accurately identify their positions within the global division of labor, and develop leading industries that give full play to their comparative advantages. They could specialize in these industrial sectors and segments, lengthen local value chains and achieve economies of scale and scope.

Second, Global South countries can utilize their latecomer advantages to acquire mature technologies and models at lower cost and apply them in manufacturing industries to enhance production efficiency and increase product value. The international community could also help Global South countries exploit critical minerals and new energy sources, establish green, accessible and affordable energy systems, and resolve pollution problems and reduce carbon emissions, so as to promote green industrialization.

Third, Global South countries should proactively plan and build infrastructure, such as energy, transportation, water conservancy and information and communications, and improve the quality, efficiency, connectivity and digitization in line with industrial development. Given their limited resources, Global South countries can prioritize the development of industrial parks and economic corridors to foster industrial clusters, cultivate industrial ecosystems and integrate into global and regional industrial and supply chains.

Fourth, Global South countries should enhance the rule of law in their business environment, and protect the legitimate rights and interests of foreign investors. They should enhance the transparency, stability and predictability of industry policies to boost investor confidence. They need to harmonize standards and ensure regulatory compatibility in intellectual property protection, environmental issues, labor protection and finance based on industry needs and national conditions.

Fifth, Global South countries can leverage technological assistance from international organizations such as the United Nations Industrial Development Organization and the World Bank, international vocational education cooperation initiatives such as China’s Luban Workshops, and mentoring partnerships between multinational corporations and upstream and downstream businesses to strengthen education and training for their workforce. Governments, industry organizations and international institutions can also work together to train entrepreneurs in Global South countries and help them strengthen their skills of opportunity identification, market development, risk management and business operations.

Last but not least, the multilateral trading system with the World Trade Organization at its core should be safeguarded. High-quality development of the new platforms and mechanisms for development cooperation such as BRICS and the Belt and Road Initiative should be promoted. Global South countries can also promote regional market integration and industrial systems for complementary and mutually beneficial cooperation in trade, investment and technology. Industrialization can become a key area of South-South cooperation to enhance mutual learning on industrial policies and the exchange of development experience.

Meanwhile, despite the ongoing trade conflict between China and the United States, the possibility of trade and business cooperation between the European Union and China has not increased as expected. This is because the shift toward greater strategic autonomy for the EU is marked by a complexity of factors, many of them unseen and, even, poorly understood.

It is clearly the case that European markets are becoming more dependent on good bilateral trade relations with China. Because of the White House's policy of imposing punitive tariffs on its trade partners, the EU and China could witness increased trade in the near future, at least, and very possibly in the longer term as well. Yet the unseen and unappreciated reality of the highly speculative financial bubble underlying the growing instability of the EU and US economies is a crucial factor that must be recognized. This problem, which failed to be properly addressed during the global financial crisis in 2008, has only increased in unpayable speculative debt. EU central banks are also caught up in this spiral of speculative debt.

Their solutions of simply raising and lowering interest rates to fight inflation will not work, not in the short term nor the long term. Instead, there is a need to return to the policies of Glass-Steagall established under former US president Franklin Roosevelt to legally distinguish the lines between commercial banking and investment banking. There is no other reasonable or competent policy to eliminate this massive speculative debt in the system.

Despite this, the likes of the London and Wall Street banks will not like nor accept this policy voluntarily. Also, the Western central banks, under which only private assets are protected, will need to be replaced by national banking, which will allocate credit to private banks based on the general interests of the people and the common good. This credit will be issued by the national bank to the private banks to promote real production and physical infrastructure.

This is called the "physical economy" and has been referred to by the Belt and Road Institute in Sweden as "Belt and Road Economics". These ideas of physical economy can be traced back directly to German philosopher and polymath Gottfried Wilhelm Leibniz, and in modern Western European history to US economist Lyndon Larouche.

China has been operating on these principles from within its own political and economic policymaking bodies since the historical changes initiated under late leader Deng Xiaoping in the early 1980s. The historical development of China in the last 40-plus years rests on socialism with Chinese characteristics. Yet these characteristics are similar in nature to what has above been identified as physical economy and national banking. In addition, such theories are also reflected in the historic initiative proposed by President Xi Jinping — the Belt and Road Initiative — in 2013.

Though China and the EU could achieve positive development because of US tariffs on its trade partners, it will not necessarily lead Europe in the right direction for global peace and development embodied in the Belt and Road Initiative and other initiatives, such as the Global Development Initiative, the Global Security Initiative and the Global Civilization Initiative. Therefore, we are seeing a schizophrenic behavior from the EU as it seeks better economic trade relations with China, while at the same time calling for a massive military buildup to defend itself against "Russian and Chinese aggression".

This topic was also addressed at the recent webinar of the Belt and Road Institute in Sweden under the theme "EU at the Crossroads". The continued stability and sustainability of China together with the Global South, thanks to the Belt and Road Initiative and BRICS, is the proper direction for world peace and development. It will continue to be the perspective and the goal of the Belt and Road Institute in Sweden for 2025 and into the foreseeable future.

By Chen Xiao and Stephen Brawer for the China Daily.