This article argues that upgrading in China has been a historical success, that upgrading must be seen as a learning process, and that current Chinese upgrading involves a transformation in industrial learning dynamics. During China's initial export‐oriented industrialization strategy, indigenous producers successfully upgraded by apprenticing themselves to their foreign customers, and they learned through integration in transnational communities of practice. The success of those initial unilateral learning relations enhanced the sophistication of the Chinese market, both as a community of producers and as a market for manufactured goods. This has generated a new phase of learning‐driven upgrading in which Chinese producers and MNC manufacturers both seek to make their Chinese operations more sophisticated. In this new context, apprenticeship disappears and Chinese and foreign players learn from one another. A core claim about the new mutual learning is that it is facilitated by the globalization of formal learning systems, such as corporate production systems (CPSs).

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