China is breaking the rules of development. Typically, as countries progress up the value chain, they transition from agriculture to light industry, then to heavy industry, and ultimately to high-technology and services. And as they move up the value chain, this creates opportunities for less-developed countries to advance.
But China’s not doing that. Chinese manufacturers are holding on to their immense productive capacity, enabling them to produce both low-tech sneakers and high-tech semiconductors at a scale and cost that are unrivaled.
