In this special edition of the Hinrich Foundation’s podcast on global trade, the Association of Foreign Press Correspondents-USA sits down with Mariko Watanabe, Professor with the Faculty of Economics at Gakushuin University, to examine how China’s pursuit of industrial scale has driven manufacturing dominance while fueling systemic overcapacity and mounting tensions in the global trading system.
China’s manufacturing dominance — now accounting for more than 30% of global output — reflects four decades of industrial strategy, state planning, and coordinated investment that have built one of the world’s most integrated production ecosystems. Yet the same system, anchored in the government’s Catalogue of Industrial Guidance, has also encouraged waves of investment into favored sectors regardless of market demand. This has fueled persistent overcapacity in industries ranging from steel and solar panels to electric vehicles and batteries, contributing to falling prices, global trade frictions, and what some economists describe as “immiserizing growth,” where expanding output depresses prices to the point that export earnings remain modest. As geopolitical rivalry with the United States intensifies, China increasingly treats industrial scale as a strategic asset, reinforcing a cycle of capacity expansion that risks deepening supply-chain fragmentation and destabilizing global markets.
Watanabe argues that addressing these pressures will require both domestic rebalancing toward consumption in China and stronger international cooperation — including more effective trade rules, safeguards, and coordinated action among middle powers — to prevent the gains from industrial scale from concentrating in a single economy.
Tune in to this podcast as Mariko Watanabe, Professor with the Faculty of Economics at Gakushuin University, joins the Association of Foreign Press Correspondents-USA to assess how China’s catalog-based industrial policy has driven remarkable manufacturing growth while generating structural distortions at home and growing frictions abroad. The podcast follows up on Watanabe’s recent article for the Hinrich Foundation, “China’s industrial policy a recipe for overcapacity.”
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