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China vs. US: Manufacturing comparison

China has recently become the world's top manufacturing country by output, ending the United States' 110-year run as the largest goods producer according to IHS Global Insight. The last time China held the position was around 1850, however since 1895 the manufacturing industry has been dominated by US producers.
 China tops US to become world's leading manufacturer bu..
 
 
China has recently become the world's top manufacturing country by output, ending the United States' 110-year run as the largest goods producer according to IHS Global Insight. The last time China held the position was around 1850, however since 1895 the manufacturing industry has been dominated by US producers. Conflicting reports about the future of Chinese and US manufacturing however have now emerged from industry professionals and experts. So what are the differences between these two countries?

CHINA

Last year, while the recession hit the US, China continued to expand and its manufacturing sector grew 18 percent, contributing more than $2 trillion to the economy. Over 2008-2010, China's manufacturing sector grew at a phenomenal pace of 20.2 percent per year. Although low labour costs and working hours are a major contributing factor, China has also benefitted from government subsidies and an artificially weak renminbi.

However, productivity is still a massive issue. IHS's Head of World Industry Services Mark Killon points out: “The US has a huge productivity advantage in that it produced only slightly less than China’s manufacturing output in 2010 but with 11.5 million workers compared to the 100 million employed in the same sector in China.”

China's manufacturing increase is a fundamental shift in the global division of labour and goods production and due to the dramatic reduction in costs for producers, this trend is unlikely to change in the near future.

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USA

The US are still major contributors to worldwide manufacturing
, accounting for 19.4 percent of goods output. Hindered by the recession, US manufacturing only grew 1.8 percent over 2008-2010, however the industry still contributed an estimated $1.95 trillion to the American economy.

Although analysts and experts suggest that the economic downturn was a major contributing factor, labour numbers and costs are vastly different as American manufacturing is focused on higher value products, high-tech methods, better management and more skilled workers.

Jack McDougle, Senior Vice President of the Council on Competitiveness said:"American manufacturing jobs pay, on average a total of $70,000 a year including benefits. The value that they create is much higher."

The US economy is also two-and-a-half times the size of its manufacturing competitors. China's gross domestic product for 2010 is an estimated $6 trillion, compared with an estimated U.S. GDP of $15 trillion.
 
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