China to Pass U.S. as World’s Top Manufacturer

Posted by: Bruce Einhorn on August 12, 2008

The economic news from China right now isn’t great: Factories are hurting, exports are down and the inflation figures are mixed (today’s consumer price inflation figure was an encouragingly moderate 6.3%, but yesterday’s producer price inflation number was alarmingly high at 10%). Investors in Chinese-listed shares have taken a beating, with the Shanghai stock index having collapsed from a high of 6124 last October to just 2430 today. Deterred by rising costs for Chinese labor, some investors are looking elsewhere. For instance, yesterday’s Financial Times reports investors from Europe are shifting their attention to Russia: According to the FT, foreign direct investment from the EU in China was just 1.8 billion euros ($2.7 billion) last year, compared to 6 billion euros in 2006.

Still, amid the short-term gloom abvout the Chinese economy, consulting firm Global Insight says there’s reason to be optimistic. Also in yesterday’s FT is this report about Global Insight predicting China will soon pass the U.S. as the world’s top manufacturing country. Next year China will account for 17% of the world’s manufacturing, compared to 16% for the U.S. Global Insight had earlier predicted the U.S. would retain the top rank till 2013, but the economic downturn in the U.S. has hit manufacturers hard.

Reader Comments

Steven

August 13, 2008 4:48 PM

exports are down? Why the number in my brain is a growth of more than 20% comparing with last year? Could you please give us the source of your data?
Growth of more than 20% is not bad at all since China's export has been high growth since China entered WTO (2001?). That growth cannot last of course, let alone China is closing the factories of high pollution and comsume a lot of resources. Another important trend in China's export is that the growth for ordinary trade is higher than processing business.

Jerry Antoine

August 18, 2008 1:33 PM

USA should tax imports of Chinese goods to help build parity between Chinese manufacturing and USA manufacturing. Sure TVs might cost a little bit more, but then US workers might be able to pay their mortgages and buy some of them...

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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