Financial Times: China to overtake US as largest manufacturer

China to overtake US as largest manufacturer
By Peter Marsh in London

Published: August 10 2008 22:37 | Last updated: August 10 2008 22:37

China is set to overtake the US next year as the world’s largest producer of manufactured goods, four years earlier than expected, as a result of the rapidly weakening US economy.

The great leap is revealed in forecasts for the Financial Times by Global Insight, a US economics consultancy. According to the estimates, next year China will account for 17 per cent of manufacturing value-added output of $11,783bn and the US will make 16 per cent.

John Engler, president of the National Association of Manufacturers, a Washington-based trade group, played down the effect of the projections. It was “inevitable” that China would take over on account of its size, he said. “This should be a wholesome development for the US, for it promises both political stability for the world’s largest country and continuing opportunities for the US to export to, and invest in, the world’s fastest-growing economy.”

As recently as last year, Global Insight economists predicted that the US would retain the top position until 2013, but a large downward revision in likely output this year and next is expected to cause the US to slip more quickly than had been expected. ......(more)

The complete piece is at: http://www.ft.com/cms/s/0/2aa7a12e-6709-11dd-808f-0000779fd18c.html?nclick_check=1

Their success in destroying the middle class has reached another milestone.

The choice between importing and buying domestically rests on a very small difference in maufacturing costs. Once transportation costs rise significantly due to more expensive oil, the Chinese will lose huge markets which will be forced to buy domestically. Unless China can boost its own consumption significantly, it faces a huge recession.