China Takes the Crown

After 110-plus years, China has supplanted the U.S. as the world’s top manufacturer of goods, according to a study by IHS Global Insight.

According to the study, China produced 19.8 percent of the goods consumed worldwide last year, inching ahead of the U.S., which produced 19.4 percent of the goods.

“This marks a fundamental shift in the global division of labor [involving goods production] which is unlikely to be reversed in the near future,” Nicholas Crafts of Warwick University told The Financial Times.

China previously held the title in 1850, before ceding the top spot to Britain, it is believed. Around the beginning of the 20th Century, America took over the top spot and held it since last year.

China has been buoyed by a plethora of cheap labor, mercantilist trade practices and failed trade policies on the part of the U.S.

America’s trade policies have put American workers in direct competition with Chinese workers. They are paid just a fraction of the cost of American workers.

As if that wasn’t bad enough, the Chinese government works actively to game the system, gaining a competitive advantage through whatever means necessary.

“This shows the need for the U.S. to compete in the future not on the basis of commodity manufacturing but on innovation and new kinds of services that are driven by production industries,” Deborah Wince-Smith, chief executive of the Council on Competitiveness, told The Financial Times.

China’s rise has been fast and disconcerting for those who care about America’s place in the world. For years, America’s position as the world’s foremost economic power allowed it to lead. Now, that position could be up for grabs, and China is looking to take hold.

Since the 1970s, American politicians of both parties have neglected the nation’s manufacturing sector in favor of expanded free trade in a rush to be at the forefront of the globalization movement. But, free trade has been anything but beneficial to American manufacturers, and the problems have only accelerated in the past two decades, right along with the pace of globalization.

American good-producers were already struggling to keep up with their low-cost foreign competitors before the North American Free Trade Agreement and China’s entry into the World Trade Organization, but soon after the situation grew exponentially worse.

Wince-Smith said the U.S. “should be worried” about these recent developments.

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