June 22nd, 2010
05:26 AM GMT
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When  I saw this story from CNNMoney.com’s Chris Isidor (“China close to catching U.S. in manufacturing”), my first thought was this:

The U.S. still makes things?

Since China’s economic star was sent into orbit on the back of becoming the world’s major manufacturing center, the surprise to me wasn’t that China was about to eclipse the U.S. in manufacturing, but that it hasn’t already happened yet.

According to economic research firm HIS Global Insight, the value of goods produced by China's factories in 2009 reached about $1.6 trillion last year, compared to $1.7 trillion by U.S. manufacturers. Isidor writes that China will likely pass the U.S. in 2011, but that it could be a “close call’ this year.

So what does the U.S. still make? Plenty, it seems.

The  products Americans buy at Walmart and other chain stores may come from China, Myanmar, Sri Lanka or other low-cost textile centers, but many products higher up the value food chain - such as aerospace, heavy industry equipment and microchips - can still be tagged  “Made in the U.S.A.”

With China’s ability to grow through the recession  and  the large hue and cry from U.S. politicians and union leaders about lost jobs to Asia, it’s a reality check for those who are quick to write off the U.S. economy. As Isidor writes, manufacturing is more than a third of China’s economy, while it makes  up less than 13 percent in the U.S.

This is a telling point as people are quick to hand the economic mantle to Beijing. China may be on the cusp of overtaking Japan’s economy as the second largest in the world,  but China has a long way to go to top the U.S.  In 2009 China’s GDP was $4.9 trillion – the U.S. total economic output  was  about $14 trillion.



soundoff (34 Responses)
  1. Alex

    China's GDP grows 10% per year, while the U.S. only 3%. It's a matter of only 20 years for the Chinese economic output to catch up with the U.S. 20 years is not a long way at all.

    June 22, 2010 at 6:19 am |
  2. saen

    Wow I didn't know that China will grow exactly at 10% for 20 years. It's growth will never slow or speed up.... America better just throw in the towel.

    June 22, 2010 at 6:54 am |
  3. Luke

    It's all very well that our great country still excels that of China in the production of aerospace and heavy equipment etc, but I don't buy those very often,and rely on household items to make my day go better. But my day does not go better when I pay good American money for an item, then have to return it, or buy another with in a few months because the original permanently malfunctioned. The second one usually malfunctions as well. No great wonder, is it, that our economy is in the dolrums? We (the fantastic marketeers that we are) gave it all to China in the name of making a better profit. Who loses in this process? The American consumer and Amercian workers, that's who! Our jobs and economy is in China. While they gloat about how their economy has survived unscathed froma world recession, ours is still in a slow recovery.
    I would gladly pay a bit more for a product made in America and know that it works and an American made it, than pay a little less for a pice os crap. If you can find something still make in America, BUY AMERICAN.

    June 22, 2010 at 7:21 am |
  4. Justin

    To poster Alex:

    When countries escape what is known as the "poverty trap", where savings and investment nearly equal zero, the country's economy begins to grow rapidly, as we saw with Japan followed by China (soon to be followed by many other rapidly developing countries). However, we see that after a period of time, growth almost always levels out to around a 3% per year average. To assume that China's economy will grow at 10% per year indefinitely is likely incorrect.

    Even if it does, countries benefit through trade. I'm not worried about what the Chinese person has in his wallet; I get cheaper goods, he gets my strong American dollar or Starbucks or Gucci sunglasses (whatever people like these days..).

    This is the manner in which the world operates. Lost jobs aren't "lost jobs". The economy simply readjusts. Pre-industrial revolution, 2/3 Americans farmed. Now, 3% farm. Did we lose 64% of jobs in America? Of course not. Now stop worrying about auto manufacturers (who only have themselves to blame for labor unions driving up labor prices and thus forcing American auto industry out of competitiveness).

    Thanks for reading.

    June 22, 2010 at 7:51 am |
  5. Dennis

    It's also 20 years where people in china will get more and more salary, till they are taken over by another power that can produce cheaper.

    Good thing i guess , The amount of extremly poor will slowly decline.

    June 22, 2010 at 7:58 am |
  6. Eric

    Yes, and everything tagged "Made in the USA" is really made in the usa...really... Get real.

    June 22, 2010 at 8:14 am |
  7. Vishal Bhatia

    USA's economy maybe 14 trillion US$ – but dont forget that out of that 14 trillion, 8 trillion is the mortgage market which is in a superb mess.

    American kids lack the drive to pursue maths and sciences as subjects. Check out any grad engineering class in top US universities and you will find Russians, Indians, Chinese and the likes.

    The day is not far when the US will be a poor cousin to China and other nations. European Union is a dead concept now – thanks to profligate ways.

    June 22, 2010 at 9:06 am |
  8. Henk

    I bet most of those flags are made in China. And by the way China`s number 1 goal is to be the best at everything, especially high tech research and construction. The US is a nation where over 80% has an invisible friend in the sky and over 50% hasn`t accepted basic Science like Evolution. The US is no match for China in the long run. The US no longer has the massive Brain drain from people moving away from Europe because of War Either. Like Enrico Fermi (Atom Bomb/ Nuclear Power), People Like Albert Einstein, People like Werner von Braun (Saturn V Rocket that put America on the moon). One can only image how much US history would have been changed without millions of these people moving to the US. Economy also: China growing at over 8% a year the US at 3%. Only a matter of time before this "third world" Nation China catches up and moves beyond. In fact the US is already loosing leadership with projects like Fusion Energy with ITER and with High level Particle Physics with the Large Hadron Collider. Sports like Football with the World Cup have become far more popular then Any US Sport could ever dream of. The US debt is rising exponentially. Other Nations like India and Brazil are on the rise as well and willing to compete. The list is endless. Fact is; The US will become less and less influential as the years go by.

    June 22, 2010 at 9:16 am |
  9. mjs

    Every industrialization nation followed essentially the same road as china or india or brazil....

    June 22, 2010 at 9:51 am |
  10. m

    The one difficulty I have is that many foreign companies set up factories in china.Use the cheap efficient labour,pay cheaply for quality made goods and sell at 100 or even 1000 times more profit.....!

    June 22, 2010 at 9:58 am |
  11. Rahul

    Well i think, all these present world's conditions will frustrate US & US may use some weapons like HAARP to destroy china completely in a matter to few weeks. US is just a sleeping gaint & has so many "hidden" weapons that the world does not even know.

    June 22, 2010 at 10:01 am |
  12. Gabriele

    Wealth is mostly made of objects. Services and government merely distribute wealth (when not actually destroy it). China produces about the same wealth of the US.

    June 22, 2010 at 10:03 am |
  13. Chris Oliver

    Predicting the future is not an exact science.

    One thing is for sure though: income distribution plays a key role in Economy "development" (and not only "growth). We all know China's Gini index is high and it's getting higher and higher. What's the use in being the largest producer of cheap gadgets and low cost goods if 80% of the population is below the poverty line? And what can one tell about a country where "freedom" is not guaranteed by its Constitution?

    US and EU's history were based on freedom of speech and democracy (hypocrisy too, of course) and that's the way capitalism has been working so far. Being the "individualism" one of the pillars of the system, India and Brazil are "kinda" following the industrialized countries' path, but that's certainly NOT the case for China and Russia.

    So, let's just wait and see what the "BIRC Future" will look like.

    June 22, 2010 at 10:24 am |
  14. Dick Cheney

    Henk, Vishal,

    Maybe we'll invade or nuke your countries before any of your predictions come true.

    June 22, 2010 at 10:38 am |
  15. Fred

    I don't see any problem with China overtaking the US in economic size. There are many more people in China than in the US, and they want to live well, too. I think that is absolutely OK.

    June 22, 2010 at 10:44 am |
  16. Oscar Jung

    Americans should be glad to outsource low cost (and knowledge) production. By educating your workforce better American production companies can focus on high end products which produces higher value (and thereby salary) pr employee. This also brings higher satisfaction as classic manufacturing is rather boring and physical hard for emploees.
    Moreover, In China is growing a new market of 1-200 milions with the same buying power which desperately wants western design and status products which can be sold with a good margin.

    So outsourcing creates initial problems, but creates so much more value for Americans in the long run!

    Oscar Jung, Denmark, Europe (Non native English writer)

    June 22, 2010 at 10:52 am |
  17. Ronald Watson

    There's nothing like informative clarity and logic. It not only clears the air but it also avoids the unknown knowns and unknowns. It's articles like this one that gives some justification to reading decent journalism.

    June 22, 2010 at 10:59 am |
  18. Robbie

    @ Alex. With that kind of superb analysis, you might as well apply to head the IMF! Genius!

    June 22, 2010 at 11:24 am |
  19. SD

    Yea brain drain. Except most graduate students from China are extremely hard working but lack the most rudimentary tools of creativity. Those that are creative and imaginative are the ones that never want to move back to China or India if they can help it. I know this because I am one of 5 American graduate students in which in a class of 30.

    June 22, 2010 at 11:41 am |
  20. Evan

    The China bubble: the next big economic meltdown.

    June 22, 2010 at 12:09 pm |
  21. lolo

    China will grow and grow and grow. Then, when the US is no longer their biggest consumer, they will make THEIR goods in the US (cheap since we owe them gazillions). Until then, they'll keep their cheap labor manipulating their currency. China is building a capital empire with communist mentality. ;P

    June 22, 2010 at 12:50 pm |
  22. Wretched

    USA's gdp is a statistical trick. Much of it is imaginary numbers like "services".
    The Chinese will rock us soon – they seem to have this thng called a "work ethic" whereas we have this thing called "entitlement" so that we don't have to work!

    June 22, 2010 at 1:03 pm |
  23. VMitchell

    Many, many reasons to understand the extraordinary strengths of the US and for optimism in the future:

    1) The US is the world's largest manufacturer, with a gross output of nearly $5 trillion ( >$1.7 trillion in GDP contribution) producing 20% of all the world's manufactured goods, a market share it has held for decades – Japan and the EU have had their shares decline precipitously, something rarely noted – also America produces one-third of all the world's high tech goods. (manufacturing jobs have been lost in less competitve industries, yet has remained strong in higher and higher value industries)
    2) Spends 45% of the world's research and development money, guarenteeing future prosperity
    3) At $15 trillion, it remains by far the largest economy in the world, 4x's larger than China
    4) The US is deliberative, self-critical, and self correcting, and so unlike incessantly criiticizing Europe and the Middle East, it is dynamic and fluid, changing as it needs to–identifying problems and rapidly fixing them
    5) Its unmatched culture of leading universities, think-tanks, public debates, entrpreneurship, coupled with its domination of technology and science provides it with an extraordinary productivity and potential.
    6) Despite what some may say, the US, without imposing, has the most attractive culture the world over; this is a reflection of the overt and subtle things about America and Americans which makes it so emulated and great.
    7) The net worth of Americans even after the 'Great Recession' is some $60 trillion, a sum equivalent to the entire world's annual output (GDP).

    June 22, 2010 at 1:26 pm |
  24. Phijo Joseph

    Remarkable Americans living on others bread

    June 22, 2010 at 1:39 pm |
  25. Khurram

    PEOPLE ARE JOBLESS,HOMELESS, HEALTH LESS and no I am not talking about AFRICA....Welcome to the USA.

    June 22, 2010 at 2:17 pm |
  26. I Horowitz

    Can someone please tell me why this government has not sent the military to implode the oil well that is causing a worldwide ecological holocaust and put a stop to a tragedy that will resonate for at least 100 years or more ??? I believe the Russians did it in Siberia in 1976.

    June 23, 2010 at 2:14 am |
  27. ZAR

    Vishal, you wrote that American kids lack the drive to pursue math and science as subjects. Written like the typical self-indulgent, smug and arrogant Indian or Chinese who thinks their mugged studying in India or China makes them smarter than people in the U.S. and Europe. It's true things may change in the coming years, but at least give credit to the U.S. and Europe for still coming up with many of the original ideas in tech and everything else like healthcare etc. It's true a good percentage of those ideas may come from Indians and Chinese and Russians, but those still represent a small number compared to the ideas coming from people of typical American ancestry, be it the Irish, English, whatever. Also, don't forget that those same Indians and Chinese who contribute those ideas happened to get their higher education in Western universities. With all the aptitude for science and math in India and China, when was the last time you saw something of lasting value originate in either of those countries, at least of late. I'm not talking about Kung fu or Yoga. Let me give you an example of Indian math and science skills. The Indian defence establishment through companies like HAL have been trying to develop a Light Combat Aircraft (LCA) for over 15 years. They've spent billions of taxpayer dollars in their quest to build an "indigenous" aircraft. First, they realized their Kaveri engine was a dog and outsourced the engines to Snecma. A few years later, they realized their avionics were a dog too and they floated a tender to get that from the West. Since then, they've also floated tenders for aircraft design. So let's now do the math on what the smarter Indians with their superior math and science skills can design to make the aircraft at least somewhat indigenous. Hmnn, I'm thinking, I'm thinking, oh yes, they can design the nuts and bolts that hold the plane together. Oh, and before you start defending with the oft used retort of "Well, at least we're the IT kings of the world", let me put that too in perspective for you. One of your major national english newspapers just announced the launch of their newly redesigned website, designed by a firm in Tampa Florida, by a person of South American origin. So there you go, for all the math and science of your IT majors, a Latino in Florida could do a better job than the 1.2 billion people in India. Or at least better than the millions of engineers you produce there with their superior math and science skills. Sometimes it's not drive my friend, but simply the ability to use common sense. You need to separate your ego and over-inflated sense of pseudo-achievement from that of real achievement.

    June 23, 2010 at 5:00 pm |
  28. FinMinn

    Hi

    I completely agree with Zar. I am from India but studied mostly at American Universities and agree that most Indian graduates can solve the toughest math or science problem but won't have the common sense to put those skills to a practical use. Most American education institutions follow the Socratic Method whereas the top Indian institutions follow the Lets Mugg and Spit in the examination method.

    I studied at a top 5 engineering school in US and I felt that not many American students pursue masters or PhDs but then I realized that the American students who were pursuing higher studies were really passionate about the subject and wanted to conduct research in those areas. There was this American student in an image processing class who could give the professor a run for his money and his project thesis was the best in history of the class. In India or China everyone wants to become an engineer or doctor not realizing their true passion and it just becomes a rat race. As to the IT sector, I worked in a financial services firm and got to interact with many Infosys graduates and many times they just couldn't get their point across. Many of them would group in a conference room and discuss different aspects of application development just in Tamil or some local language. If it weren't for the US business, the Indian IT industry wouldn't have existed....so that is one point that needs to be driven home. Lastly, all the languages that IT professionals use to code are developed in western countries, so before you (Vishal) discount western countries I would like you to consider your assumptions again. Always remember, quality supersedes quantity. Yes, one point I would agree on is that we need to see more American graduates pursuing higher studies but not without passion for the subject.

    June 24, 2010 at 2:52 am |
  29. Mao

    Once China has all the jobs nad money it will be easy for us to conquer the poor malnurished citizens of your United States. Meanwhile, your military will have no money to build and maintain your superior weaponry or pay soldiers once we call in all your country's debts and bankrupt Washington. This is our plan all along.

    June 25, 2010 at 12:11 am |
  30. tom

    you should blame george bush senior for cutting a deal with the chinese in 1974 he was then the ambassedor to china he made a deal with the chinese. that they will become the biggest manufacturers in the world but everything has to be done in dollars and that they would have to buy u.s. dept in return .thats why america is falling apart....now all the chinese have to do is dump the dollar to really destroy the american dollar and the economy

    June 25, 2010 at 7:03 am |
  31. Mao

    ha ha ha ha.....our plan is working. The round eyes are blinded by frivolous entertainment – video games, sports etc. The M-TV generation is half brain dead. The consume but produce little for the people. We use thier Universities to learn thier technologies which we use against them. Soon the white and blue will be taken out of their flag.

    June 25, 2010 at 10:16 am |
  32. robert

    O.K , Heh don't worry about China surpassing the U.S. in manufacturing ( They make toys for the Dollar Stores ) .

    The Manufacture of Military weapons of War by the U.S. ( And the Expending of them in Wars ) will ensure that you remain No. 1 , but what a reputation ... the deadliest country in the world .
    And if nothing else , you can always impose sanctions and whine about their military expenditures , which are a mere shadow of the U.S.

    It will be a while before they become as deadly as yourselves , the experts in the Making of the Machines of War , and of War itself .

    Yankee Doodle Dandies , All . Rah , Rah , Boom Bah

    June 29, 2010 at 5:26 am |
  33. Meredith

    Don't fall for it America. Your products are excellent which is more than I can say for China. Their standards are very low. Coming from Australia where we don't manufacture anything anymore as we have lost all our manufacturing industries to China, most things break in no time. Whenever I buy something from America it is usually very good with good replacement parts. Keep up the good work.
    Wow, how did this comment by Mao get through your radar CNN? They are pretty over the top and probably true but really very racist in their content.

    June 29, 2010 at 10:10 pm |
  34. Joel

    Everyone just needs to stop buying anything and everything made in China!
    Stop trying to save a few cents and actually go buy something made with great quality, something from USA or the EU for instance.

    Remember stop shopping at the $1 Dollar store and save your money for something that is a bit more expensive but of better quality and will help keep USA being the world's number 1 manufacturer.

    June 30, 2010 at 5:56 am |

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