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Photo by Zhou Gukai, Li Gen/CFP
I
n the economic climate following the global financial crisis, both the US and China seem to be realizing that while financial markets fluctuate, the smart money always goes with something tangible. Like manufacturing. In a recent report, the US Department of Commerce describes manufacturing as “a source of prosperity, innovation and pride,” and “crucial” to the country’s future competitiveness. The US, birthplace of the assembly line, dominated the world’s manufacturing output for over a century – before being overtaken by China in 2010. On the bilateral and global market, the “Made in China” brand has shown its power ever more clearly. In terms of trade in goods, the US has long been the largest source of China’s surplus, and China the largest contributor to the US deficit. According to the WTO, China has been a larger exporter of manufactured goods than the US since 2006, and that gap is growing by the year. Both countries have set ambitious goals for the future. In July the Advanced Manufacturing Partnership Steering Committee, set up by President Obama one year earlier, made specific proposals on enhancing the US advantage on innovation-oriented manufacturing. China, for its part, has made progress on moving up the value chain towards advanced manufacturing. An important part of the US initiative is to entice its own manufacturers back to American soil. US companies have already begun to re-arrange their global resources. Some have returned home. Some have chosen cheaper places like Southeast Asia and Mexico. More are considering following suit. As this relocation involves their China operations, it may not only affect China’s manufacturing competitiveness, but could reshape the overall competition between the world’s top two manufacturing powers, particularly since China was planning to use US investment to help achieve its goal.
Workers with Rainbow Arts and Crafts Co. in Jiangsu Province produced soft-toy versions of Wenlock, the London 2012 mascot
Manufacturing Exodus
Play to Your Streng Technology transfer from US companies does little to improve China’s manufacturing, but foreign investment doesn’t have to end there By Li Jia
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NEWSCHINA I October 2012