China Is Officially Dusting the U.S. in Manufacturing (and That's OK)

By Jordan Weissmann

In 2010, China just barely edged out the United States as the world's top manufacturer by output -- a distinction it hadn't held since 1850. Still the two countries were basically neck and neck. 

No longer. The United Nations has updated its national accounts data to capture 2011, and thanks to China's breakneck growth, its manufacturing output is now leaving ours in a cloud of coal dust, as shown in this graph from AEI's Mark Perry. China's trend line is practically an asymptote.

China_World_Largest_Manufacturer.jpg

The chart tracks the combined category of manufacturing, mining, and utilities because the U.N. didn't track manufacturing alone for China until 2004. That said, they're beating us on the solo category too, $2.3 trillion of output versus $1.9. 

As a point of pride, this might all be a bit of a blow for the United States. As an economic issue, though, it's not really so terrible.Yes, we envy China's factory and export engine, but we still build plenty here. In fact, we're building more than ever, and much of our output consists of extraordinarily profitable, technologically advanced products like aircraft that China has yet to master. And, though it's sometimes easy to forget with all the talk of China rising, we're also, well, richer. America's household consumption alone generated $10.7 trillion of economic activity in 2011 -- $3.5 trillion more than China's entire gross domestic product. This, despite the fact that our population is one quarter the size. We might not be the world's top builders anymore, but our economy's bias towards spending does insulate it a bit from the rest world's economic problems, something China's policy makers almost certainly envy themselves.

This article available online at:

http://www.theatlantic.com/business/archive/2012/12/china-is-officially-dusting-the-us-in-manufacturing-and-thats-ok/266221/