The Limits of Copying Beijing: Industrial Policy Spreads Across the Global South

The Financial Times argued that China's main comparative advantage is its industrial policy, and that Western attempts to copy Beijing's state-funded model are unwise, in a commentary published Sunday. The article contends that the conditions that make China's directed investment possible, including its scale and its tolerance for losses, do not transfer easily to market economies.

The debate is not confined to the West. Indonesia has issued a new government regulation governing the export of natural resources, the state news agency Antara reported, part of a broader effort to capture more value from its minerals rather than exporting them in raw form. Resource-rich developing economies are increasingly using state power to direct how their commodities are processed and sold.

That goal is central to Indonesia's sovereign wealth fund, Danantara. The fund's chief operating officer, Dony Oskaria, emphasized transparency in the management of its strategic investments, Antara reported separately, as the country builds institutions to manage state-led investment on a large scale.

From a sound-money perspective, state-directed investment carries a familiar risk. When governments allocate capital according to political priorities rather than market signals, the danger is malinvestment, which means productive capacity built where the returns do not justify it, with the costs appearing only later. The spread of industrial policy across the Global South is a structural change worth tracking, because its costs may not become clear for years.