According to United National data, the U.S. is still the largest manufacturing country in the world. In 2009, American manufacturing output was about 45% larger than China’s. The U.S. has also maintained its global share of manufacturing, at 20% in 2009 compared to just over 22% in 1980. What’s more, American manufacturing is becoming more productive. In 2009, productivity in U.S. manufacturing increased by 7.7% more than any other country.
So why do so many Americans think the U.S. doesn’t make anything anymore? Part of the reason is that we’re deceived by what we see every day. Shopping through your local supermarkets, you’re going to see a lot of “Made of China” labels on things like clothing or electronics. The U.S. tends to make stuff that requires more technology and engineering know-how, like planes, semiconductors and machinery. Basic economics tells us that is exactly how things should be. Since China has so many, low-wage laborers, there is no way high-wage America can possibly compete in products that require teams of workers to manufacture, like toys, apparel, consumer electronics, and a lot of other stuff you’ll find on Wal-Mart shelves. Making such products in the U.S. would simple be too expensive. But the U.S. still is very competitive in the types of products that demand a high level of technology, engineering and capital to produce. In such industries, wages don’t matter quite as much, and the U.S. can capitalize on its clear advantage over emerging markets like China in expertise, technology and innovation. That’s why the U.S. sells Boeing aircraft to china, and the Chinese sell blue jeans to Americans.
And it is here where we find the big challenge for china as a manufacturer going forward. Though there are some Chinese companies that are able to successfully compete in these more complicated industries—telecom equipment maker Huawei, for example, which has gone head-to-head with European makers—but generally speaking, Chinese manufacturing is lagging in technology, quality control, managerial and engineering expertise and other very important aspects of high-end manufacturing.
