Review– Overflow: A Future History of Manufacturing in China

Overflow: A Future History of Manufacturing in China
Zhan Shi
Citic Press, 2020, 333 pages
施展《溢出:中国制造未来史》出版社: 中信出版集团

The recent and ongoing China-United States trade war is unprecedented in scale. All sorts of knock-on effects have since followed. For example, there are many reports that Chinese manufacturing industries are moving to Southeast Asian countries, especially Vietnam, to avoid high tariffs in the United States. This alone raises question whether Vietnam (and other Southeast Asian countries) would take over from China as the world’s next factory? Zhang Shi, professor at China Foreign Affairs University in Beijing (中国外交学院), tries to answer this question in his newly published book.

This book presents an in-depth research on the manufacturing industry of China and Southeast Asian countries, based on his fieldwork in 2018-2019. It offers an overview of the developments and changes on the four global industrial revolutions, and the different backgrounds and choices of industrial development in China and Southeast Asian countries.

Based on a political economy perspective, this book first examines the development status and trend of China’s manufacturing industry in the context of industrial revolution and changes in the pattern of international relations at the macro level. Supplemented with a fieldwork perspective, it examines the key factors in promoting the transfer of industrial chain to China and to China’s neighboring countries in recent years.

From this analysis on the relationship between China’s manufacturing industry and the manufacturing industry of Southeast Asian countries, it draws two main conclusions. First, Chinese manufacturing is not moving out to Southeast Asia, but Chinese supply chain is spilling over into Southeast Asian countries, such as Vietnam. Second, Vietnam has not imitated what China did in the past. In fact, based on a ten-year projection the book predicts that Vietnam’s economy will be more embedded in the Chinese supply chain network. China still retains (and will retain – as the author predicts) her special advantages and cutting-edge technological industries and thus, making it impossible for Vietnam (and any other Southeast Asian countries) to replace her status.

Another important contribution of the book is its discussion on the evolution of international political and regional economic relations. It offers two lessons to understand our contemporary situation and thus, explains why Vietnam will not replace China to be the next factory of the world.

First, it discusses two common patterns of developing a competitive industrial system in a developing country (in this case, Vietnam) by comparing the path of industrialized countries: with Japan and South Korea on the one side, and with Australia and Canada on the other side. It shows that a country cannot develop a complete industrial system if it cannot independently develop its heavy and chemical industries. Vietnam’s development path and trajectories seem to follow the path of Japan and South Korea.

In the meantime, however, Vietnam is facing different global context and conditions that make it difficult to follow the path of Japan and South Korea. Vietnam is forced to craft her ways in a completely different international and domestic settings than the ones Japan and South Korea faced forty and fifty years ago. In the current setting, Vietnam has chosen to align itself with the United States on security issues but the label by which the United States identifies its allies is whether a country is a free-market economy or not. Since the United States will not allow Vietnam to complete her own industrial system construction in a non-free market economy way, this structural contradiction determines barriers to Vietnam to independently form and complete its industrial system. Hence, the United State-led security order in Southeast Asia fundamentally limits Vietnam to advance its economy.

I would recommend this book for Southeast Asia specialists to reconsider our discussion on the region’s economies, and also for policy makers to reevaluate the implications of current economic alignment with the US economy. It offers a lesson on how our research has paid too much attention to analyzing external factors in international politics and thus, we fail to fully grasp the changes in the real world. Perhaps our research focus now needs to return to the nature of global industrial development, the practical impacts that technology and digital economy have on global industrial development and division of labor, and the unique roles that enterprises in various countries play in global development.

Reviewed by:
Shulan Zhao

Deputy Director, International Collaboration Office, Yunnan Academy of Social Sciences, Yunnan Province, PRC.