Prof Dr Haico Ebbers, Professor of International Economics at Nyenrode Business University, examines three common misconceptions the West has about China
For the first time in modern history, the next generation will work in a world not dominated by the West. This is a new world in which China (and the Asian region) will dominate world economics. Hence, the need to understand China.
Change inevitably sparks fear, and in this case, Western media has ignited and spread it. This fear, combined with data taken out of context, leads to common misconceptions about China.
To settle into this new world, we must take the time to challenge these misconceptions and understand where the reality lies. It’s not enough to think in black and white, especially when the reality is rarely so simple.
Misconception 1: China’s economy is a bubble set to collapse
Headlines recently have warned of China’s imminent collapse – commentary that has recurred in Western media since the 1990s. This is untrue: China’s economy is not set to collapse, and in my opinion, these figures put out by China are often not as manipulated as the media often claims they are.
A common misconception is that China’s economy depends almost entirely on exports for economic success. If this were the case, it should then mean that China is highly susceptible to global shocks, such as the U.S. tariffs.
China is reliant on exports only if you look at gross exports, not net exports. Let’s look at iPhone production as an example. Approximately 80% of total iPhones are labelled as being assembled in China by manufacturers like Foxconn and Luxshare. However, this ‘made in China’ label refers only to the final assembly. Most iPhone components are sourced from hundreds of suppliers worldwide. So, a substantial fall in gross exports is not hurting the Chinese economy severely.
Another key claim in Western media is that China’s consumption is low and stagnant. But while household consumption makes up roughly 40% of China’s GDP, compared to more like 70% in other countries, consumption growth is rather robust. GDP is still increasing by 5-6% each year, according to World Bank data. This is quite dynamic!. In other words, it is still experiencing rapid growth.
Misconception 2: Innovation is Western. China is centralised and just imitates
Another commonly held belief is that China’s highly centralised government and governance structure leaves little room for innovation. The assumption is that decisions are generally made in Beijing, rules are rigid, and businesses simply follow instructions rather than experiment.
Yet while China is politically centralised, its approach to economic development is far more decentralised than many people realise. On certain economic indicators, China is extremely decentralised. According to the IMF, around 85 of government expenditure is carried out by provincial and local governments. This means local governments can support local industries, implement national priorities, and have relative flexibility in how they do so. And there we see a lot of alignment between the local governments and innovative companies, large and small.
The Belt and Road Initiative demonstrates this well. Although the central government conceived it, provincial and municipal governments have driven much of the project’s implementation, competing to develop logistics hubs, overseas partnerships, and infrastructure projects aligned with national objectives.
Instead of copying Western approaches, China has developed its own organisational approach. The central government sets the strategic direction, while local governments experiment and innovate in how they achieve those goals.
Misconception 3: China is the biggest investor in Africa
Another claim Western media makes is that China has become Africa’s biggest investor. While China’s economic presence in Africa has grown massively, once again, this does not tell the full story.
According to UN Trade and Development (UNCTAD), European investors hold the largest stock of foreign direct investment (FDI) in Africa, followed by the United States and China. China’s FDI stock in Africa sits at around $42 billion, meaning that, while China is a major investor, it is not the continent’s largest.
Yet China’s recent investment flows remain prominent in Western media, particularly in infrastructure and Belt and Road projects.
The distinction between FDI flows and FDI stock is important here. China has become one of Africa’s fastest-growing investors in recent decades, but recent investment flows should not be confused with total investment accumulated over the previous years. Many European countries have maintained commercial relationships with African economies for more than a century, meaning their overall investment presence remains larger.
Looking beyond the headlines
When we look at these misconceptions in more detail, we can see that, in many cases, we are not thinking it through fully. The challenge to the West now is not to simply accept every media narrative about China.
Instead, we must think critically and understand the reality, rather than try to simplify a complex economy to fit a single predetermined narrative.
Because the reality is rarely as simple as headlines suggest.
