THE contemporary global economy is at a crossroads. As US President Donald Trump engages in political gimmicks, a significant reality emerges: there is an “unintended collision,” as patent lawyer Alexander D Georges terms it, between intellectual property (IP) rights and tariffs.

In today’s global trade environment, particularly following the Trump administration’s tariff measures, safeguarding and managing IP has become increasingly complex. Tariffs, intended to protect domestic industries, have introduced new challenges for businesses in managing their IP assets.

The resulting higher costs, fractured collaborations, and elevated infringement risks suggest that Trump is undermining the United States’ intrinsic value and strategic economic dominance.

This situation reveals a fundamental reality: while IP rights and corporate branding have traditionally formed the bedrock of Western economic power, the actual production of the goods generating this wealth occurs in nations often marginalised in strategic policy discussions.

From iPhones assembled in China and Mexico to Ford vehicles produced in South Africa, the tangible engine of modern commerce resides not solely in Western boardrooms but also on factory floors across the Global South. What was once viewed as a strategic relocation driven by capital’s pursuit of cheaper labour now illustrates that economic power is no longer confined to the West.

The growing disconnect between ownership and production of global capital has come under intense scrutiny, particularly as geopolitical tensions reshape international commerce. China’s rise, characterised by industrial pragmatism rather than an ideological alignment with free-market orthodoxy, necessitates a critical reassessment: IP rights lose their sanctity when supported by outsourced labour and fragmented global supply chains.

Amid escalating tariff wars, countries like Zimbabwe and South Africa are marginalised — not for lack of capability, but because they remain tethered to economic systems they did not design or control. This highlights how the established global order often disadvantages those who provide its material foundations.

This article explores how China’s industrial strategy simplifies the complexities of international commerce by prioritising material production over legal abstractions like IP rights. China’s model, grounded in control over manufacturing, logistics, and access to critical resources, illustrates that IP can be viewed not as an untouchable legal virtue but as a flexible instrument subordinate to productive capacity and national interest.

The 2019 OECD/EUIPO estimates indicate that around 90% of seized counterfeit goods originate from China. Contextually, the total trade in counterfeit and illicit goods represents a significant portion of global commerce, accounting for roughly 3.3% of all global trade.

The Chinese model reveals how the West’s dependence on outsourcing key elements of production has eroded its industrial base and weakened its economic narrative, which still clings to the primacy of intangible assets like branding and patents. This model marginalises the significance of labour and infrastructure in value creation, obscuring the material underpinnings of wealth.

Ultimately, this article argues that the prevailing global capitalism rules, designed to protect ownership divorced from production, are structurally flawed and increasingly ineffective in a world shifting towards multipolar industrial power. These contradictions unveil a system built on unstable premises, where legal fictions mask economic dependence and material inequality.

The notion that a product is “American” because it was conceived in California while being produced in China, Mexico, or South Africa highlights a core contradiction in contemporary capitalism. IP-centric models, particularly dominant in Western economies, elevate the intangible (brands, software, patents) over the tangible (labour, machinery, logistics) that make the product real.

Yet without the latter, the former holds no value. For instance, the iPhone is legally protected in the US under Apple’s extensive IP regime, but its production relies almost entirely on Asian factories such as Foxconn in China and Pegatron in Taiwan.

China understands that ownership is not merely about legal registration but control over production. Its trade doctrine embodies the principle: “You own nothing until you produce it.” This implies that China has redefined the value chain, making the external economic subordination faced by African countries and the Global South untenable.

When Western companies brought their blueprints to China in the early 1990s, they assumed their rights would remain intact. However, Chinese economic practices prioritise the tangible, where production takes precedence, followed by logistics, with brand loyalty or legal rights considered subsequently, if at all. This approach is not piracy but pragmatism, forming the basis of China's economic power and resilience.

The tariff wars initiated by the Trump administration — continued under Joe Biden and now Trump’s second term — were never merely about restoring domestic jobs or asserting economic sovereignty.

Wrapped in the language of national interest and industrial revival, these policies revealed a truth: contemporary capitalism depends fundamentally on externalised labour, offshore manufacturing, and globally fragmented supply chains. By levying punitive tariffs on imports from China, the US implicitly acknowledged its vulnerability, lacking internal productive capacity in key sectors, including textiles, electronics, and critical minerals.

Far from reasserting strength, these actions exposed a contradiction at the heart of the Western capitalist model. Claims

Siyayibanga le economy!

* Siyabonga Hadebe is an independent commentator on socio-economic, political and global matters based in Geneva.

** The views expressed here do not reflect those of the Sunday Independent, Independent Media, or IOL.

economis strategy

How China’s industrial pragmatism exposes the false virtues of global capitalism