Will China still be the world's manufacturing center in 2030?

[Bussard Ramjet]

Will China still be the world's manufacturing center in 2030?

(This is my answer to the question.)

Yes.

First let me just cite the most recent data on the current state of things:

This is an image regarding output of top manufacturers, on the basis of Manufacturing Value Added.

(Manufacturing Value Added is the value addition in manufacturing happening in a country. So for example, in the manufacturing of an iPhone, only the manufacturing done in China for the iPhone, is included, which will obviously exclude out the value of things like Chip Fabrication, Display, etc.)

China Solidifies Its Position as the World’s Largest Manufacturer

China would retain the title of the manufacturing center because:

1. Talent: China will, by 2030, still have a huge labor force, which will be far better skilled and educated than any country at a similar level of development. The higher education enrollment rate in China are very high. This labor is also cheap for their education levels.
2. Infrastructure: China already has a world class Infrastructure, and continues to invest in this regard. In the East Coast, the Infrastructure levels approach, or even exceed that of the West.
3. Investment (Overseas): China has huge foreign reserves, which till now have been in low yielding investment products like T bills. It is now beginning to deploy its capital for Infrastructure Investments across the world, which help Chinese companies get contracts for their products, ranging from cranes, steel, cement, capital products and the like. Basically it helps create markets, and ensure their access to Chinese firms.
4. Location: China is at the center of Global Supply Chains, and will only extend this centrality over the next 10 years, as lower value added manufacturing increasingly proliferates to countries in South East Asia.
5. Climbing up the Value Chain: China has huge potential to make higher complexity, greater value stuff like Aeroplanes, Medical Devices, Chips, LCDs, Robots, LNG Carriers etc. Currently, China is located in the lower-middle section of the value chain, where it makes fairly cheap and bulk products. Hence, while a single Boeing jet would sell for $100 million, China would have to produce a record 500,000 metric tons of Steel to make a value of about one Boeing Jet. Just look at the difference of scale and weight. Steel worth 500,000 metric tons, is largely equivalent to value of a 100-200 metric tons jet. So, if the above chart were to actually account for Manufactured Goods in weight or something, China could as well take almost half of the world's manufacturing.
6. Lack of a viable competitor: Look at all the countries and their shares. After China, at 23% comes US with 17%. But, even the most optimistic projection of US manufacturing growth will be 2%. Rather, US will itself start facing competition in higher value added segment, while the lower value added stuff would largely just shift to S E Asia. Next come Japan, Germany, and Korea, all of which have severe demographic problems, and are already in the high end segment, which will see competition from China in the coming years. The other countries with shares around 2% are too far behind, and it will be a big achievement to even cross the 10% mark. On top of that most of them are again developed countries, with limited scope of growth. The only ones with scope of growth are Indonesia, Mexico, and India.
7. Trendlines: China is already migrating in the value ladder, and by 2030, we could very well be flying in Chinese made jets. China has active programs to climb the value chain, and make increasingly complex stuff. Chinese ship building sector has started making LNG carriers, Cruise Liners which are among the most complex, and expensive ships. Chinese semiconductor and electronics industry is going at a tremendous rate. I think China's advance in the value chain is a constant across sectors, albeit with differing paces.
8. Policies/Government Support: Chinese Government, Bureaucracy, Banks, are very good at implementing policies in tandem, and coordinated matter. No country today can do what China is doing in the Ship Building sector. Here, Chinese banks are supporting Chinese leasing companies and ship owners with incredibly cheap credit, for placing order at Chinese Shipyards, to manufacture incredibly complex ships. The scale is incredibly huge.
9. Market/Consumption: China has a huge market of its own, which gives it the ability that few other countries have.

https://www.quora.com/Why-does-China-force-Tibetans-to-embrace-modern-life/answer/Devendra-Govil

 

[shadows888]

I better learn mandarin..

Well, it will certainty enrich your life culturally as well, not just your professional work.