From Behind the Curtain

Why Regional Industrial Path Development Must Take Geoeconomics More Seriously. Reflections on the ‘China Shock 2.0’

Abstract

This commentary argues that regional industrial path development (RIPD) needs to take geoeconomics more seriously. While RIPD research has generated important insights into how industrial paths emerge, stabilize, transform and decline through the interplay of structure and agency, wider geoeconomic dynamics have remained comparatively under-specified. Even where extra-regionality is considered, it is often conceptualized primarily in relational terms. This article argues that such perspectives need to be complemented by greater attention to geoeconomic structural forces, including industrial subsidy regimes, trade and tariff regimes, exchange-rate dynamics, global overcapacity, geopolitical rivalry and security-driven restructuring. These forces increasingly shape the conditions under which regional industrial paths develop, but do so unevenly across sectors and regions. The argument is developed in three steps. First, the article situates geoeconomics within a changing global political economy marked by revived industrial policy, deep interdependence and intensified strategic competition. Second, it advances a conceptual clarification by distinguishing between endogenous regional dynamics, relational extra-regional dynamics and broader geoeconomic structural forces. Third, it uses the anticipated “China Shock 2.0” as an illustration of how geoeconomic pressures reshape industrial conditions for actors, industries and regions. The illustration shows that path development in sectors such as automotive and clean-tech cannot be understood adequately without considering how Chinese industrial expansion, macroeconomic management and overcapacity alter the wider terrain of development and competition. The commentary concludes by outlining avenues for future research on geoeconomic exposure and dependence, multiscalar agency and policy responses, path development trade-offs, and the links between geoeconomic restructuring and regional resilience.