China to be #1 Manufacturing Exporter in 2006, Shifts to More Advanced Technology

In a new report from the Manufacturers Alliance/MAPI (Arlington, Va.), The Chinese Export Juggernaut in Manufactures Overtakes the United States and the Policy Implications, Ernest H. Preeg, Ph.D., senior fellow in trade and productivity for the research and executive development organization, analyzes recent Chinese export performance and examines U.S.-China export competitiveness.

The report highlights a number of key concerns:

  • In 2001 U.S. manufactured exports were more than double those of China, in 2005 the two countries had roughly equal levels of exports, and in 2006 China will almost certainly overtake the United States to become the number one exporting nation for manufactures;
  • The composition of Chinese exports has been shifting rapidly toward advanced technology, which now account for about 60% of total manufactured exports, and away from labor-intensive industries, which are down to a 25% share;
  • U.S. manufactured exports grew by only 1% per year during 2000-2004, compared with an average 25% growth in Chinese exports, while in 2005 the export growth was 10% and 29%, respectively; and
  • Regarding technological innovation, there is a growing accumulation of examples of Chinese development of leading edge technologies, in both the civilian and defense industry sectors.

Preeg explains that these developments indicate a sharp decline in U.S. export competitiveness in the manufacturing sector and pose a threat to long-standing U.S. leadership in advanced technology sectors and in innovation and development.

“The U.S. manufacturing sector remains the strong international leader in technological innovation and development, and it can retain its leadership role, together with a resurgent export performance, for the foreseeable future,” Preeg concludes. “This will require, however, a forceful and comprehensive U.S. policy response, at both the international and national levels, which has not yet taken shape.”

Source: Manufacturers Alliance/MAPI

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