China becomes the largest manufacturer

In 2010, by most measures, China overtook the United States as the world's largest manufacturing country, ending a lead the US had held since the 1890s. China's factories now produce around 30 percent of global manufacturing output and more than half of the world's steel and cement. A country where most people were farmers in 1978 had become the workshop of the planet in a single generation.²⁴

The ascent rests on two earlier turning points. Deng Xiaoping's reforms from 1978 let farmers sell crops, opened special economic zones such as Shenzhen to foreign investors and allowed private firms. Then, when China joined the World Trade Organization in 2001, exporters gained secure access to Western markets, and multinational companies moved production there to use huge pools of low-cost labor, new ports and expressways, and the dense supplier networks of the Pearl and Yangtze River deltas. Foreign firms brought know-how, and Chinese firms learned fast.³

The shift had winners and losers. Hundreds of millions escaped poverty, and Chinese firms moved up from toys and shoes to phones, solar panels, batteries and electric vehicles. In the West, studies of the so-called China shock estimate that import competition cost the United States up to about 2.4 million jobs between 1999 and 2011, concentrated in furniture, textiles and electronics towns. Today supply chains for goods from medicines to wind turbines pass through China, which makes both trade policy and supply security central issues for governments.¹⁴