From VoxEU, January 17:
The US is the world’s sole military superpower. It spends more on its military than the ten next highest spending countries combined. China is now the world’s sole manufacturing superpower. Its production exceeds that of the nine next largest manufacturers combined. This column uses the recently released 2023 update of the OECD TiVA database to paint an eight-chart portrait of China’s journey to superpower status and the asymmetric impact that its dominance has had on global supply chains.
I'm not an expert on China, but during ongoing work on global supply chain disruptions with my co-authors Rebecca Freeman and Angelos Theodorakopoulos, I've noticed a stark fact that I don’t think is as widely known as it should be. China is the now world’s sole manufacturing superpower.
This column uses the OECD’s recently released 2023 update of their invaluable TiVA database to show, in eight charts, how this came to be. I will skip the historical Chinese reform narrative as that has been well covered by real China experts (e.g. Wang 2023, World Bank 2013, Ranganathan 2023).
The world’s big players in manufacturing
The charts in Figure 1 show two views of global manufacturing shares in 2020 (the latest year in the database). The left panel displays world shares in terms of gross production; in the right panel, the same is shown in terms of value added. The distinction is in intermediate inputs: Chinese gross production equals the total sales of Chinese manufacturers; Chinese value added is their gross production minus the purchased intermediates.
Figure 1 Slicing the global manufacturing pie, 2020, gross production basis
Source: OECD TiVA database, 2023 update.
Six nations manufacture at least 3% of the world total. China is followed by the US, Japan, Germany, India, and South Korea. Note how the world has changed. Only three of these are long-established industrial economies; the other three are newly industrialised economies. Four of the G7 don’t make the cut. The chart separately identifies nations with shares of at least 2%, and on the left, this includes Italy, France, and Taiwan (two of the G7, the UK and Canada, don’t make the cut). In the right panel (value-added basis), the UK makes an appearance with a share just above 2%....
....MUCH MORE