Americans are used to the U.S. being the leader, or a top-ranked nation, in many areas. But in a number of industries and businesses, the U.S. has lost that first place, usually to China. While some, such as coal production, may not come as a surprise, other industries where the U.S. has lost market leadership might. 24/7 Wall St. looked at a large number of manufacturing, agricultural and financial businesses to find those in which China has surpassed the U.S.
For several years, economists have said that China’s GDP growth indicates that its economy will pass that of the U.S. in the next two or three decades. China’s GDP is measured at about $6.5 trillion, now second in the world. America’s GDP is over $15.2 trillion, according to the International Monetary Fund. While China certainly has much catching up to do, the two countries’ rate of GDP growth is also very different. Last year, China’s economy expanded at more than 9%. America’s GDP grew at a little better than 2%.
One reason that China continues to gain so rapidly on the U.S. is the high cost of American labor and manufacturing. In fact, U.S. manufacturing costs have risen so much that they are much higher than in any developed nation with factory capacity. This includes countries like China, Mexico and South Korea — places the U.S. and Japanese companies often contract to do their factory work. The labor price advantage has helped China become the largest steel producer in the world. China is also first place in car manufacturing.
Low labor costs are not the sole reason China has become the single largest provider of many goods. China’s 1.3 billion citizens have become voracious consumers as workers in its manufacturing sector have grown the number of its middle class. China also has decided that it is often financially better to provide its own raw material for its factories — items like cotton — than it is to import such items from overseas.
24/7 Wall St. examined the manufacturing, agricultural and financial businesses in which China has surpassed the U.S. China likely will become the world’s largest economy based on GDP. It certainly has shown that it has the capacity to advance on that position — one large industry at a time.