Analysis of "East Rising, West Declining" from 30 Years of Changes in Industrial Added Value Between China and the US

How fast has China's industrial development been? Let's look at the evolution of the share of industrial added value between China and the US. This is also a microcosm of the reshaping of the global economic landscape over the past 30 years. In the 1990s, the US held the top spot, while China was just beginning to accumulate strength. Leveraging the information technology revolution and globalization, the US maintained its industrial added value at a high level, with a global share consistently above 20%. At that time, China's industrial base was quite weak, at the initial stage of market-driven industrial production, with a global share below 5%. Moreover, its industrial added value mainly consisted of light manufacturing and contract processing. 2001 was a turning point, as China officially joined the WTO and became deeply involved in the global supply chain. From this point, China's industrial capacity began to surge explosively. Meanwhile, the US experienced industrial offshoring, rapid growth in finance and service industries, and a continuous decline in both industrial employment and added value. In the 2010s, China officially surpassed the US to become the world's largest industrial power. The US began to realize the issue of manufacturing hollowing-out, launching a period of “reindustrialization” reflection. The Obama administration began to promote “manufacturing recovery” and “reindustrialization” strategies. Also, we may recall that eight years ago, then-new US President Trump started the “trade war” against China. Sanctions were also imposed on high-end manufacturing sectors, such as semiconductors. After the “eight-year resistance,” we can now clearly see that the “trade war” and sanctions not only failed to make China's share decline but instead led to continued growth. Currently, China's industrial added value accounts for more than 30% of the global total, leaving the US far behind. Globally, the US has managed to maintain its share in industrial added value over recent years. This indicates that, although China keeps developing, it is mainly the European share that has been taken. Europe's share of the world has declined from about 20% a decade ago to around 15% today. Of course, we must also recognize the gap. The US still holds core technological advantages in mid- and high-end precision manufacturing, semiconductors, and pharmaceutical R&D. Despite the widening gap in total volume, the technological content and profit margins of each unit of US industrial added value remain very high. This is why China is now vigorously developing these sectors, continuing its climb up the value chain. Data sources: World Bank, WTO, Bruce Mehlman