China set to surpass U.S. as top manufacturer
NEW YORK (MarketWatch) -- China is forecast to surpass the United States as the world's leading manufacturer in nominal dollar terms next year, earlier than expected, as the U.S. economy slows down and China's continues to grow at unprecedented rates, according to consulting firm Global Insight.
The nominal value of U.S. manufacturing weakened somewhat sharply in 2007, and despite the outlook for modest recovery in the coming years, China will likely gain the largest share in global manufacturing as early as 2009, Global Insight said in a report released Tuesday.
"The basic reason [for China closing the gap] is that growth in the U.S. economy has essentially been zero over the last year and will continue to struggle over the next year," said Nariman Behravesh, chief economist at Global Insight.
"We know that China is a big manufacturing giant now," Behravesh said in an interview with MarketWatch. "What this study suggests is that it will continue to play an increasingly larger role" in the world economy.
Measured in real value-added terms, China's share in global manufacturing is forecast to overtake that of the U.S. by 2016-2017, boosted by rapid gains in market share of textiles, basic metals, computer equipment and mineral product manufacturing, according to Global Insight.
However, the U.S. will continue to lead in certain high-value industries, such as aerospace, pharmaceuticals and specialized equipment.
The manufacturing sector accounts for only 12.5% of gross domestic product in the U.S., while it makes up 36% of the Chinese economy. Manufacturing as a share of the U.S. economy has been declining for decades, with the service sector enjoying a much more dominant role.