China may have already won the global race
Originally published in Nikkei Asia
Apple's struggles with Indonesia's regulatory landscape -- underscored by its inability to sell the latest iPhone -- contrast sharply with the growing success of Chinese firms. As the U.S. and China battle for global dominance, developing nations find themselves at a crossroads. The Trump administration's America First policies may have unintentionally accelerated China's rise.
Apple, a symbol of U.S. tech prowess, has struggled to align with Indonesia's regulatory and economic priorities, failing to meet the smartphone local content requirement despite a $1 billion AirTag factory proposal. In contrast, Chinese firms like Oppo, Vivo and Xiaomi have captured market share by localizing production, creating jobs and forging strong ties with the government. Now, Indonesia seeks a restart with Apple, viewing the success of Chinese firms as a model and expecting Apple to follow suit.
U.S. firms often approach investment with a "gold standard" mindset, imposing stringent requirements like high labor and environmental protocols. While admirable, these demands often clash with the capacities and priorities of developing nations, as Indonesian officials have repeatedly criticized. In contrast, China's business model is pragmatic, flexible and action oriented. A senior Chinese official put it, "When there is a call, there will be an answer." Developing nations are drawn to the quick wins and tangible benefits despite sustainability concerns.
Many governments in the Global South are desperate for domestic growth and job creation, yet U.S. companies often overlook this. China's rapid infrastructure and technology delivery, though imperfect, addresses pressing local challenges and creates a perception of genuine partnership. This shift reflects a broader trend where China's pragmatism and flexibility are favored over Western ideals of high standards and strict conditions.
Across Africa, Southeast Asia, Latin America, and the Pacific, Chinese investments are pouring in, while Western allies struggle to keep up. The Global South is no passive observer, its leaders are making strategic choices, and increasingly, China's action-first approach is the one that resonates.
The broader geopolitical implications are stark. The U.S.'s inward turn, with a focus on domestic priorities under Trump 2.0, could intensify the perception that U.S. investment favors jobs at home over abroad. This will reinforce the view that China is a more reliable partner, especially in regions like Southeast Asia, where U.S. economic ties were once prized.
Donald Trump's policies are likely to drive China into a more prominent role in Global South governance. By prioritizing tariffs, protectionism and withdrawing from multinational agreements, the U.S. has redefined its global position, creating a vacuum that China is poised to fill. State-backed Chinese companies have swiftly entered markets where U.S. firms hesitated to invest, capitalizing on these gaps and reshaping the global economic landscape.
The key question now is whether the U.S. can adjust its approach before it's too late. Will American companies, like Apple, reassess their focus on developing markets and find new ways to support long-term job creation? Or will they effectively forsake the Global South, hoping for greener pastures elsewhere? Or could the business instincts of Trump and his key advisors find a more pragmatic way forward?
Attracting U.S. companies to invest in the Global South is challenging, but policy levers exist. The U.S. International Development Finance Corporation is one such lever, using tailored financial instruments to support private investment in developing economies. The World Bank plays a similar function at a multilateral level. Both have important reform initiatives underway that the Trump administration could support to leverage greater Western investment and create more jobs in the Global South. Additionally, by providing technical assistance and capacity-building, they could help nations strengthen governance and infrastructure without compromising economic progress.
However, recent developments complicate the situation, as the Trump administration's actions against USAID make using the U.S. International Development Finance Corporation and the World Bank contradictory to its cynicism toward development agencies.
A crucial course correction is needed to remain relevant in a rapidly shifting world. If not, China's adaptable and pragmatic investment strategies will continue to win the loyalty of the Global South, leaving the U.S. increasingly side-lined.
While the U.S. and Western allies deliberate on their next move, China is already on the ground, shaping the future of developing economies. The U.S. may soon find itself not only struggling to maintain influence, but also to engage effectively in key future markets. In this battle for global influence, the race may already be won -- by China.
