China’s Dominance in Manufacturing Poses Issues for Developing Countries

Published on Author whelihans15

20150314_LDP001_0China has transformed itself and the world economy with their export-centric strategy, the country has increased their 3% share of global manufacturing output by value to almost 25%. Currently producing 80% of the world’s air-conditioners, 70% of our mobile phones and 60% of shoes, China’s rapidly expanding export monopoly has forged supply chains reaching deep into South-East Asia, this area (AKA “Factory Asia”) now makes half the world’s goods. Despite a flagging property market plagued by excess supply, rising debt, and the 7% growth goal, the lowest in almost two decades, China retains three advantages in manufacturing that will help keep their economy afloat: low-cost manufacturing, the reach of “Factory Asia,” and increasing domestic demand as spending increases and tastes become more sophisticated in China, Asian supply chains are strengthened and Factory China gains a larger share of higher-margin marketing and customer service. Due to these and other reasons, Factory Asia’s dominance in manufacturing will endure, making development and growth for emerging markets from India to Africa to South America much more difficult. Exports remain the surest path to success for emerging markets, and competing in global markets is the best way to boost productivity, but due to China’s disproportionate and unrelenting share of the manufacturing sector, emerging market countries will have to rely on not just manufacturing, but agriculture and services as well in order to drive development.


2 Responses to China’s Dominance in Manufacturing Poses Issues for Developing Countries

  1. But are not wages rising in China, and production of labor-intensive goods such as shoes already moving “offshore”? This article confuses the viability of Chinese manufacturing firms with the dominance of Chinese manufactured goods exports.

    • Many Chinese exports, such as cell phones, are assembled in China but use arrays of materials from imports from countries such as Taiwan and South Korea. But, as the professor said, wages are increasing in China and in China time will have to begin offshoring, potentially to these developing countries. This would eventually be a boon to their economies.