China Catches Up with the U.S. as the World’s Biggest Manufacturer

This paper compares the internal structures of manufacturing industry in China and in U.S. from 1998 to 2005 and leads to three major discoveries: first, the gaps between China and the U.S.’s manufacturing capacity have been narrowing down at a high speed in the last seven years, during which the share of added value of China’s manufacturing industry to that of the U.S. increased from 13% to 52%, and then reached 76% in 2007. Second, the labor force employed in China’s manufacturing industry increased by 50%, of which the increase of the labor force in capital and technology-intensive production sectors exceeded that in labor-intensive sectors. Meanwhile, the labor force employed in the U.S. manufacturing industry decreased. Third, labor productivity in China’s manufacturing industry increased by 2.78 times, and profits increased by 2.21 times, which are much higher than the U.S. growth rates of 18.2% and 49.5%. Obviously, the narrowing gaps between China and the U.S.’s production capacity means China’s industrial progress and the hierarchy of world industrial powers will be rearranged.