From the “Lead Goose” to the “Track-Laying Driver”: Understanding China’s New Logic in Going Global
Hello everyone, I’m your financial observer. Today, we’re going to discuss a very insightful article from “Cultural Horizon,” written by He Pengyu and Song Lei.
The main argument of this article is quite profound: Chinese companies going global are experiencing a historic shift in their role.
In the past, when we looked at Japanese companies expanding overseas, it was like a flock of geese flying in formation, with the lead goose (Japan) leading the others (the Asian tigers and ASEAN countries) along a fixed route. However, with the retreat of globalization and technological changes, this “geese formation” model is no longer viable.
Now, Chinese companies going global are more like “track-laying drivers.” They not only have to operate on their own but also build new paths for third-world countries, introducing new ways of developing and producing. This is about more than just selling products; it’s about exporting a new, more inclusive, and sustainable model of industrialization.
Next, I’ll break down this complex article into five key points to help you fully understand this economic transformation.
---
1. The Truth Behind the Numbers: Where is the Money Going?
First, let’s look at the hard data, which is the foundation of all analysis. According to data released by the Ministry of Commerce in February 2026, China’s outward non-financial direct investment in 2025 reached $145.66 billion, an increase of only 1.3% (indicating stability rather than reckless expansion). However, the structure has changed significantly:
- Investment in Africa increased by 41%.
- Investment in countries along the “Belt and Road” initiative grew by 17.6%.
- New contracts and revenues for overseas construction projects (such as building bridges, roads, and factories) reached record levels.
Meanwhile, the United Nations Conference on Trade and Development notes that although global foreign investment is on the rise, most of it is flowing to developed countries or a few hotspots, with little increase in funding for developing economies.
In simple terms: Chinese companies are no longer focusing solely on European and American markets; they are pouring significant amounts of money into the third world (Africa, Southeast Asia, Latin America, etc.). Moreover, they are not just selling goods; they are also building infrastructure and factories. This means China is becoming a crucial source of funding and a key player in the industrialization process of these countries.
---
2. Looking Back at Japan’s “Geese Formation” Model
To understand the current changes, we need to look at what Japan did in the past. Economists Akamatsu and Kojima proposed the famous “geese formation” model:
Imagine a flock of geese flying in formation:
- Lead Goose (Japan): Japan first developed labor-intensive industries (such as clothing and toy assembly). When these industries became less profitable due to rising wages, Japan moved them to the Asian tigers (South Korea, Taiwan, etc.).
- Middle Geese (Asian Tigers): These countries then took over the labor-intensive industries and began developing capital-intensive ones (such as shipbuilding and automobiles). When they became prosperous, they passed on the lower-end industries to the next tier.
- Tail Geese (ASEAN, Early China): Finally, ASEAN countries and early China took over the most basic processing and assembly tasks.
The core logic of this model was:
- Industrial ladder migration: From labor-intensive to capital-intensive to knowledge-intensive.
- Trade-friendly investment: Japan transferred industries it was no longer competitive in, allowing the receiving countries to produce and sell those products back to Japan, creating a virtuous cycle.
In simple terms: It was like a relay race, with Japan passing the baton to South Korea, which then passed it to China. As long as the lead goose kept moving forward, the others would follow. This model was very successful in the late 20th century, leading to the prosperity of East Asia.
However, this model had two critical assumptions:
1. The lead goose (Japan) would always innovate and stay ahead.
2. The following geese could only follow and could not forge their own paths.
---
3. The Current Dilemma: Why the “Geese Formation” Can’t Fly Any Longer?
The article points out that the world has changed, and the old “geese formation” model is no longer effective. Why?
1. Changing technological systems: In the past, companies were vertically integrated, doing everything from start to finish. Now, with modular and platform-based systems, research and development are separated, and cooperation has become much more flexible. Japanese companies, known for their rigid, hierarchical management, have struggled to adapt to rapidly evolving technologies like AI and internet platforms, missing out on opportunities.
2. China’s Leapfrogging: In the geese formation model, the following countries were supposed to gradually catch up. But China has achieved technological breakthroughs in areas like electric vehicles, 5G, and high-speed rail, even setting global standards. China is no longer just a “tail goose”; it has become a new leader.
3. Retreat of globalization, Western closure: Globalization used to be advancing rapidly, with free trade. Now, the U.S. is promoting “manufacturing back” and focusing on supply chain security, reducing openness to third-world countries. If third-world countries stick to the old Western path, they may find themselves blocked.
In simple terms: It used to be like a teacher leading students; the teacher (Japan/Western countries) showed the way, and the students (developing countries) followed. But now the teacher has lost its way, and the path (globalization) is partially blocked. If the students can only copy, they are at a disadvantage. They need to learn to drive and even build their own paths.
---
4. The New Role of China as a “Track-Laying Driver”
This is the core concept of the article: Chinese companies going global are acting as “track-laying drivers.” This metaphor comes from world-system theorist Arighi, who suggests that the new global leader (China) cannot repeat the old paths but must create a new development route that is different from the Western one.
What specific actions are Chinese companies taking in the third world?
1. Exporting cost-effective production methods: They’re not just selling cheap goods; they’re teaching local companies how to produce efficiently.
- Examples: Jinan Second Machine Tool (which started by making presses for Ford) is now building factories in the Middle East; the Ninth Design and Research Institute of the Machinery Industry (in Changchun) is bringing its experience in building new energy factories to Southeast Asia and Mexico.
- Significance: Chinese small and medium-sized enterprises are sharing best practices on how to produce efficiently with limited resources.
2. Infrastructure first, building industrial ecosystems: Western companies often choose locations with good infrastructure. Chinese companies, however, build the infrastructure first.
- Examples: In Ethiopia, China has built industrial parks and helped plan power, transportation, and communication systems.
- Significance: Through the “Belt and Road” initiative, China is creating a production environment that meets the needs of third-world countries. Without infrastructure, development is impossible.
3. Providing new financing options: In addition to direct investment, China has established the Asian Infrastructure Investment Bank (AIIB), offering flexible financing options that focus on infrastructure and development needs, rather than strict political conditions.
In simple terms: While previous Japanese/Western companies acted as “high-end consultants,” telling others what to do, Chinese companies are like “engineering teams and coaches.” They build the infrastructure, set up factories, teach local companies the most efficient production methods, and provide loans through the AIIB. They are laying a new path to modernization for third-world countries.
---
5. Mutual Benefits: What’s the Gain for China?
Some might ask if China’s actions are just charity. Of course not; they have significant strategic value for China:
1. Solving domestic issues and improving production methods: With fierce domestic competition and rising labor costs, Chinese companies are forced to innovate and improve their production methods in different markets.
- Examples: To adapt to unstable power in Africa, Chinese companies may develop more energy-efficient equipment; to adapt to labor structures in Southeast Asia, they may optimize management processes.
- Result: These improved methods benefit the domestic economy by addressing structural challenges.
2. Strengthening alliances and coping with geopolitical risks: The world is becoming more divided, and third-world countries are more likely to cooperate with China. By helping them develop, China builds strong economic and political ties, creating a community of shared interests that is more stable than simple trade relationships.
3. Pioneering a new development paradigm: Arighi believes that the Western capitalist path has reached a dead end, with significant wealth disparities, environmental damage, and social conflicts. China is exploring a new model of mutual respect and mutual benefit. If this model succeeds, it could provide a global alternative and enhance China’s international influence and soft power.
In simple terms: It’s a win-win situation:
- For third-world countries: They get funding, technology, infrastructure, and development opportunities without relying solely on the West.
- For China: It gains access to new markets, resources, and geopolitical allies, and it enhances its competitiveness and management skills, providing a new path for domestic economic transformation.
---
Conclusion
The main takeaway from this article is that China’s global expansion has moved beyond simply selling products and earning foreign exchange. It has entered a new phase of “exporting development models” and reshaping the global division of labor.
- Past (Japanese model): A “follower” approach, chasing a set route.
- Present (Chinese model): A “pioneer” approach, building new development paths for the third world while improving China itself.
For everyone, it’s important to understand this. When you see Chinese companies building railways in Africa, factories in Southeast Asia, or promoting electric vehicles in Latin America, don’t just think about “overcapacity” or “low-price competition.” Instead, see China’s effort to create a fairer, more inclusive global economic order. This is not just about economics; it’s about China taking on historical responsibilities as a major power.