UNCTAD's Wang Dawei: Making Good Use of the "Double-Edged Sword" of the Relationship Between Trade and Industrialization

Ask AI · Under the Trade Double-Edged Sword, How Can Developing Countries Balance the Policy Environment?

On April 2, the 2026 Sadi Forum, hosted in Beijing by the China Center for Information Industry Development (CCID, SADI Institute) and the New Industrialization Research Center of the Ministry of Industry and Information Technology, was held. At the meeting, Wang Dawei, an economist from the UNCTAD Globalization and Development Strategies Division, said that the relationship between trade and industrialization is a double-edged sword. On the one hand, trade brings tremendous potential for industrialization. On the other hand, advancing industrialization through trade requires several conditions. First, there must be a relatively integrated and comprehensive policy environment that can connect trade policy, industrial policy, industrial development policy, and macroeconomic management; second, countries must participate strategically in the global and regional economy.

Global South trade growth is leading the world, but structural transformation faces major challenges

Over the past 30 years, the Global South (i.e., the collective of emerging market countries and developing countries) has seen a significant increase in its importance in global trade. In the context of Southern countries versus Northern countries, global trade can be divided into four directions: exports from Southern countries to Northern countries (North–South), trade among Southern countries (South–South), exports from Northern countries to Southern countries (South–North), and trade among Northern countries (North–North). In 1995, when the WTO was established, “North–North” trade had the largest scale, while “South–South” trade had the smallest. In 2024, 30 years later, “South–South” trade has already surpassed “North–South” and “South–North” trade, rising to the second place among the four trade modes, with growth far above the global average.

As the first echelon of the Global South, the growth of trade in BRICS countries is particularly striking. Over the past 20 years, trade within BRICS countries has expanded by about 13 times, achieving growth rates that exceed South–South trade and far outpace global goods trade. Although the expansion has been fast, trade among BRICS countries accounts for only about 20% of global South–South trade, and the growth potential has not been fully released. China’s bilateral trade flows within BRICS have increased significantly compared with 2003, gradually coming to a middle position in trade relationships.

The participation of Southern countries in global trade has surged rapidly, but trade patterns differ across regions and countries, with limitations that even appear as opposite trends.

Taking Brazil and China among BRICS countries as examples. From 2003 to 2024, the share of primary products in Brazil’s exports has not decreased but instead increased. In 2024, the share of primary products among products exported within BRICS countries is above 95%, showing characteristics of deindustrialization. In the same time period, in both global and BRICS exports, China has seen the shares of medium- and high-tech intensive products continue to grow.

This means that developing countries’ shift in trade structure still faces major challenges. A map produced by UNCTAD showing how dependent countries around the world are on exporting commodities (primary products) indicates that in the three major developing regions of Asia, Africa, and Latin America, only Asia has become an example of industrial upgrading and industrialization; almost all African and Latin American countries are commodity-dependent, with more than 60% of export shares being primary products rather than industrial manufactures.

And industrialization has an important impact on economic development. Over the past 20 years, developing countries’ share of global GDP has risen to about 40%. The growth has mainly come from Asian developing countries with the fastest progress in industrialization, while the shares of Africa and Latin America have changed only marginally.

Trade is a double-edged sword for industrialization, and China’s experience will play a unique role

Since, in the course of participating in global trade, some countries have not achieved an increase in industrialization levels—and even have shown a trend toward deindustrialization—can trade still drive industrialization, thereby leading to higher productivity and structural transformation?

Wang Dawei said that the relationship between trade and industry can be explained from two angles.

First, trade can expand the scale of industries and promote connections across different sectors. But we need to think about how to break through the “cradle protection” of leading industries and firms, and after making initial entry into the global division of labor and gaining progress, how to maintain innovation and learning, and how to spread the labor growth brought by export sectors to other sectors.

Second, the role of trade in industrialization can be achieved by changing the overall structure. Trade can facilitate the reallocation of resources. Sectors that participate in global trade may gain higher productivity, while more resources can be directed toward competitive sectors, enabling development characterized primarily by structural shifts.

“Trade and industrialization are a double-edged sword. On the one hand, trade brings tremendous potential for industrialization. On the other hand, advancing industrialization through trade requires several conditions. First, it is necessary to develop, domestically, a relatively integrated and comprehensive policy environment that can connect trade policy, industrial policy, industrial development policy, and macroeconomic management—this kind of connection is extremely important; second, countries need to participate strategically in the global and regional economy.” Wang Dawei said.

China occupies a dominant position in Global South trade and investment. More than 50% of Global South–South trade is connected with China, and China accounts for half of Global South countries’ outward investment. Wang Dawei noted that China provides other developing countries with a huge market through trade and investment, and—based on investment and industrial cooperation—enables developing countries to leverage China’s industrial advantages, accelerate breakthroughs in low-end lock-in in global value chains, and achieve technological progress. In addition, in its industrial development over the past few years, China has accumulated a large amount of policy experience, such as structural transformation, green and low-carbon development, and China’s free trade zone experiments, which can offer useful references for developing countries.

Author丨Zhang Xinyi

Editor丨Wu Lǐlín

Art Editor丨Maria

Supervisor丨Zhao Chen