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China to Supplant U.S. as World’s Largest Manufacturer by Next Year

By Jason Simpkins
Associate Editor

China will overtake the United States as the world’s largest producer of manufactured goods by next year, according to forecasts by economics consultancy firm Global Insight Inc. done on behalf of the Financial Times. 

China will account for 17% of the world’s manufacturing value-added output next year, versus the United States’ 16%, the FT reported.

In 2007, the United States accounted for 20% of manufacturing output worldwide, while China made up just 13.2%. Also, last year, Global Insight predicted the United States would hold its top position until 2013, but a severe economic downturn has expedited China’s rise to the top.

China accounted for a mere 3% of global manufacturing in 1990, but its unprecedented rate of growth has made an economic miracle of the communist state.

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John Engler, president of the National Association of Manufacturers, told the FT that it was “inevitable” that China would take over, if for no other reason than its size.

“This should be a wholesome development for the U.S.,” Engler said, “For it promises both political stability for the world’s largest country and continuing opportunities for the US to export to, and invest in, the world’s fastest-growing economy.”

China’s customs agency said yesterday (Monday) that July exports soared 26.9% to $136.7 billion. The nation’s global trade surplus was $25.3 billion in July, up 4% from a year ago.

"Though we expect a continued deterioration as the year goes on, as American and European consumers stay at home, the resilience of demand for China’s exports is still remarkable," said Standard Chartered economist Stephen Green in a report to clients.

China’s economy expanded by 10.1% in the second quarter of 2008, while U.S. gross domestic product edged up just 1.9% in that time. The U.S. economy grew at an anemic 0.9% pace in the first quarter after contracting slightly in the fourth quarter of 2007.

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