Bridges Weekly Trade News DigestVolume 15Number 9 • 16th March 2011

China Reclaims Former Perch as World’s Biggest Manufacturer

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China last year became the world’s largest manufacturer, ending the US’s run of over a century and returning to the rung that the Asian giant has occupied for much of the past five hundred years.

According to research from IHS Global Insight first reported on by the Financial Times, the value of China’s manufacturing output in 2010 was $1.995 trillion, or 19.8 percent of the worldwide total. It edged out the US, which accounted for 19.4 percent, worth about $1.952 trillion.

The symbolic shift is underpinned by dramatic changes over the past decade in the global distribution of factory output. In 2000, the countries still thought of as the industrialised world — western Europe, North America, and Japan - accounted for 72 percent of goods production, not too much less than the 80 percent figure for 1990, according to the British newspaper’s beyondbrics blog. Last year, they were responsible for little more than half. In 2000, Brazil, Russia, India, and China - the so-called BRICs - produced 11 percent of the world’s manufactures. Last year, their share was nearly 27 percent. This figure was dominated by China:  Brazil’s share was 3.1 percent, sixth overall, with Russia and India at 2.2 percent each, tied for tenth between the UK and Canada.

Based on the same IHS Global Insight data, Agence France Presse reports that between 2008 and 2010, China’s manufacturing sector grew at an annual rate of 20.2 percent, compared to 1.8 percent for the US and 4.25 percent for Japan.

China leads in manufacturing output, but not in productivity. Workers in the US manufacturing sector generated over eight times more value per person than their counterparts in Chinese factories.

“In other words, the US manufacturing sector is producing roughly the same amount of output in 2010 with 11.5 million workers as opposed to its Chinese counterpart with around 100 million workers,” IHS said, according to AFP.

WTO statistics suggest that China was the world’s largest exporter of manufactured goods in 2010, followed by the US and Germany. (Figures for both manufacturing output and trade volumes have been affected by major swings in currency values.)

Economic historians cited by the Financial Times suggest that China accounted for 30 percent of world manufacturing in 1830. It was surpassed as the world’s biggest manufacturer by the UK during the latter’s industrial revolution in the mid-19th century. The US overtook the UK in 1895, and did not relinquish its perch until last year.

ICTSD reporting; “China noses ahead as top goods producer,” FINANCIAL TIMES, 14 March 2011; “China tops US in manufacturing: study,” AGENCE FRANCE PRESSE, 14 March 2011.

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