SCDigest Says: |
 Chinese manufacturing has grown an incredible 14.25% on average over the past three years, versus a 1.37% decline per year in US manufacturing output, mostly due to recession-driven declines in 2008 and 2009.
Click Here to See Reader Feedback
|
The researchers at IHS Global Insight now say they expect the level of Chinese manufacturing to exceed that of the US by the 2013-14 timeframe.
This week, the research and consulting group noted the continued high levels of Chinese manufacturing growth, at least as reported by the government there, will lead China to move into the number 1 position that the US has now held for 110 years.
“Other than growth trends, the main factor causing the size of China's manufacturing sector to rise to the levels of the U.S., despite a big difference in the relative size of GDP, is that China has an unusually large share of manufacturing in GDP, when compared to other countries, indeed the highest share of any major economy in the world,” an IHS Global Insights statement says.
The manufacturing sector in the U.S. accounts for 13 % of GDP, versus 34% in China. Next after China is Korea, with a 29% manufacturing share of GDP. By contrast Taiwan has a smaller 23% share, and more typical is the 15-20% share of manufacturing that is seen in countries such as India, Japan and Germany. So when compared to other countries China's disproportionate share of manufacturing in local GDP works to inflate its relative size and importance among the international rankings.
Measuring manufacturing output is not easy, dependent as it is on economic date from governments, with differing degrees of accuracy, and how exactly the numbers should be counted.
In the past, when Global Insights made predictions about when China’s production would exceed that of the US, the National Association of Manufacturers took issue with some of the methods that went into the numbers,
For example, when Global Insights predicted in 2008 that China would surpass the US in manufacturing in 2009, NAM president John Engler said that “The US remains by far the world’s largest manufacturer, producing nearly one-fourth of the world’s industrial output. Based on the highly respected World Bank database, our analysis also shows that we will produce twice as much this year as the fourth placed economy, China.” The European Union and Japan rank second and third in this analysis, though most think China has now clearly moved to number 2.
Engler also said at the time he did not expect China to overtake the US until at least 2020. (See Decline in US Manufacturing Output Versus China Vastly Overstated, says NAM.)
This latest Global Insights analysis seems to address one issue of NAM criticism, in that it looks at both nominal and “real” output, the latter better normalizing currency-related issues. For example, as China’s yuan increased in value against the dollar over the past few years, that alone gave a boost to Chinese manufacturing numbers even if there had been no real change in output.
Using the “real” (inflation adjusted) numbers, with a baseline of 2005 data, takes out much of those currency issues, and with that method Global Insights now says US manufacturing output was about $1.7 trillion in 2009, versus China’s $1.3 trillion, or about 23% lower than the US total.
(Manufacturing Article - Continued Below)
|
Manufacturing Focus: Our Weekly Feature Article on Topics Related to Manufacturing Management 
