No Longer The World’s Largest Manufacturer

The Financial Times reports that China will overtake the U.S. next year as the world’s largest producer of manufactured goods. This prediction comes four years earlier than expected, as a result of the troubled U.S. economy, according to Global Insight, a U.S. economics con-sultancy conducting the report. 

According to the estimates, next year China will account for 17% of manufacturing value-added output and the U.S. will make 16%.

John Engler, president of the National Association of Manufacturers said, it was inevitable that China would take over due to their size alone.  “This should be a wholesome development for the U.S., for it promises both political stability for the world’s largest country and continuing opportunities for the U.S. to export to, and invest in, the world’s fastest-growing economy.”

Global Insight just last year predicted the U.S. would retain the top position until 2013, but a large downward revision in likely output this year and next is expected to cause the U.S. to slip more quickly than had been expected.

The data underline the surge of China’s manufacturing-led economy in the past 20 years.  In 1990, before economic reforms began to work, the article said, it accounted for a meager 3% of global manufacturing.  Manufacturing accounted for just 17.5% of global gross domestic product in 2007, but much activity in the considerably larger area of services, for instance in retailing, distribution, transport and communications, depends on it.

This reality will end the 100 years of U.S. dominance in the manufacturing segment.