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This summary covers The Economist’s August 22nd, 2026 Business article listed in the contents as China's spreading supply chains and published under the headline Routes and branches.

Globalisation is not retreating so much as changing address. Chinese manufacturers are building factories across the world, but the result is not a clean shift away from China. Instead, Chinese companies are extending their own industrial ecosystems into new countries, carrying suppliers, logistics networks and strategic technologies with them.

The port of Ain Sokhna in Egypt captures the transformation. Once a gateway for turquoise destined for the pharaohs, it is now surrounded by Chinese-backed factories making products from fibreglass to electrical equipment. A new terminal financed by COSCO and CK Hutchison opened in January, and roughly half of the recent investment in the wider Suez Canal Economic Zone has come from China. Similar clusters are appearing from Saudi Arabia and Hungary to Brazil and Indonesia.

Wider, deeper and more strategic

Chinese companies have spent more than \$200bn on overseas factories in the past three years. The article identifies three changes in the supply chains they are creating.

First, production is becoming more geographically dispersed. Chinese firms are establishing substantial manufacturing bases in nearly every region, often to reach new customers or reduce their exposure to American tariffs. Weak demand and intense competition at home also give them a reason to look abroad, while governments in the global south offer faster permits, industrial parks and access to growing local markets.

Second, these overseas operations are becoming deeper. Large manufacturers are no longer opening isolated assembly plants and importing everything else from China. Their suppliers are following them, recreating some of the dense industrial clusters that make production in China so efficient. In Morocco, for example, battery-maker Gotion is building a gigafactory near new plants for Chinese suppliers of anodes, cathodes and copper foil. A Chinese appliance-maker outside Cairo has similarly encouraged its suppliers to establish nearby operations.

Third, the expansion is concentrated in industries with strategic importance. Chinese solar-panel makers that first built factories in South-East Asia are moving into the Gulf. Electric vehicles are increasingly made in regional hubs near their customers. Thailand has become a centre for Chinese makers of high-speed optical components used in artificial-intelligence data centres. This is not merely a search for cheaper labour; it is the international expansion of industries in which China already has scale and technical strength.

A Chinese network with local roots

The new system mixes localisation with continued dependence on China. Chinese manufacturers still import machine tools and specialised components that are unavailable or more expensive in their host countries. In the first half of 2026, China’s exports of capital goods rose by 14% from a year earlier and exports of intermediate goods by 27%. Over time more inputs may be produced locally, but the suppliers making them may themselves be Chinese.

Logistics reinforces the connection. Chinese firms operate or have invested in at least 132 foreign ports, alongside airports and railways such as the recently completed Budapest-Belgrade line. These assets help bind far-flung factories into a production system that remains coordinated by Chinese companies even when the final goods carry a different country-of-origin label.

Europe illustrates the pattern. Chinese investment in new manufacturing projects there rose by half in 2025 to a record 8.9bn euros, with Hungary and Serbia drawing particular interest. In Morocco, a German wind-turbine maker now buys blades from a Chinese supplier’s local factory. Such examples blur the old distinction between Chinese imports and domestic production: the factory may be local, the customer Western and the industrial network Chinese.

The limits of expansion

This outward push still faces resistance. America’s shifting tariffs have caused some projects to be delayed, reduced or cancelled. Washington’s campaign against alleged transshipment could penalise goods with even a small amount of Chinese involvement, making tariff avoidance less reliable. Brazil and Turkey are imposing local-content rules that keep more value at home but also raise manufacturers’ costs. Currency swings and high interest rates make emerging-market projects harder to finance.

Beijing is adding constraints of its own. New outbound-investment rules restrict some transfers of technology and data and subject projects to national-security review. The Chinese government wants its companies to win overseas without giving away capabilities it considers strategically valuable.

China’s share of global manufacturing has not yet declined. It may eventually do so as more Chinese firms build abroad, but that would not necessarily make the world less reliant on Chinese industry. The geography of production can shift while control over technology, suppliers and logistics remains concentrated. The article’s central lesson is that “made outside China” and “independent of China” are increasingly different things.