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China targets to dominate one-third of world’s industries
Politics & Foreign
by Donell McGriff on Jan 12th, 2012
Politics & Foreign
by Donell McGriff on Jan 12th, 2012
Zimmetro — The strength of every nation lies in their economies and industries. A mighty industry produces strong military. That was the case of the United Kingdom, whose empire in 1870 was responsible for over 30% (one-third) of the world’s manufacturing output (Britain itself produced 23% while the Empire made up the rest) The same country saw its global power break down following massive economic and industrial devastation in World War 2.
By 1890, the USA leaped ahead of Britain for first place in manufacturing output. In 1930s, German dictator Adolf Hitler said although he acknowledged American industrial might, the U.S. would not be a great power until at least 1960s – he was wrong. In 1939, just before the outbreak of war, the US share of global manufacturing output was 33.1% (one-third), compared to Britain’s 9%, Germany’s 11%, USSR 19% and Japan’s 4%. American industries, when put into maximum utilization in a total war economy, turned the tide of World War II and crushed Japan and Germany; the same industrial strength enabled the United States to outlast the Soviet Union in Cold War.
Immediately after World War II, the United States accounted for nearly 50% of the world’s manufacturing output, it fell to 40% in 1950 when other nations re-established themselves, and stabilized at its pre-war one-third global share until the 1970s. In a period known as the golden age of American capitalism, the time when General Motors, Ford, Boeing, Coca Cola and McDonalds became household names.
USSR was the first major industrial threat to the USA, but its industries as a whole was ineffective. The closest it ever came to was in the 1970s, grabbing 20% global share of manufacturing vs. USA 28%. The USSR eventually collapsed and its share of output had since faded.
The next challenge came from Japan. After enjoying a period of economic boom known as the Japanese post-war economic miracle, Japan rose to become an international industrial superstar. Coming so near to surpassing the U.S. in 1995 (Japan global share of manufacturing output was 21.1% vs USA 22.3%), but the 1990s bubble burst brought down Japan and forever put an end to its dream of overtaking the USA.
After that, it was the EU, who collectively has a greater share of output than the U.S. and who launched the single currency Euro to counter American dominance, but Europe could never mount an effective, united competition against their neighbor across the Atlantic. In fact, more than 3 years now after the 2008 global financial meltdown, European nations are still in disagreements on how to solve their debt crisis problems.
However, nothing can last forever. Successfully defended its industries against 3 waves of onslaught, and after 110-year at the top, the US lost its manufacturing crown to an emerging power of the East, China in 2010. And as of 2011, China’s global share of manufacturing output is 21.8% vs. U.S. 13.7%
The Asian giant however, refuses to settle on that; it wants the one-third (33%) share which historically transformed Britain and the United States into superpowers.
There is reason for that too: in 1750, the dawn of industrial revolution, China was still the world’s superpower and the Manchu dynasty was at its height, with a 32.8% (one-third) global share of manufacturing output. The industrialization of Europe sent it down into a third-rated power, and apparently, China has never forgotten that.
In 1960s, China set a national goal to surpass Britain industrially; it has long achieved such goal. The country’s share of global industrial output was 6.9% in 2000, it has tripled in a decade to 21.8% now, far more than Britain’s 2%, more than U.S. 13.7% and even the entire EU 16.2%, but that is not yet what the Chinese are aiming for.
China wants to bring back 1750, an era when it reigned supreme, and that means one-third of global manufacturing.
How can it achieve that?
China is well aware that its industrial leads are mainly quantitative, not qualitative. The country clearly understands the USA, Europe and Japan still possess some leaps of technological advantages over it.
Inspired by the success Lenovo’s acquisition of IBM’s PC division, which gave China one of the world’s most advanced computing technologies and pushed Lenovo into international prominence (becoming world’s no.2 PC maker, expected to replace HP as top this year), the Chinese government has instructed its businesses to acquire top brands as a short cut to global success.
Their target? The crisis-laden Europe, who had seen their asset value sunk to dirt-cheap levels over the past 3 years.
Fresh signs of another wave of Chinese money looking to buy European assets on the cheap emerged last week, with Bank of China seeking to acquire a significant parts of the Royal Bank of Scotland (RBS), one of the ‘Big Four’ banks in the UK, and Italy’s Ferretti fallen to China’s Shangdong Heavy Industry in a $500 million deal.
Italy’s Ferretti Group is the world’s leading boat-building and motor yachts manufacturer, having one of the most advanced naval research and design centres in the planet. It is now Chinese.
Such deals would follow last month’s $3.5 billion acquisition by China Three Gorges Corp of the Portuguese government’s stake in EDP, Portugal largest company and one of Europe’s major electricity producers, as Chinese corporations continue to take advantage of Europe’s financial woes.
The Shanghai-based automobile manufacturer Geely bought Volvo in 2010, and China National Chemical Corp. paid $2.2 billion for Elkem, one of Norway’s largest industrial companies, and the world’s leading suppliers of metals and materials.
Chinese shipping giant Cosco has been given the rights to Athens and Piraeus ports, The 2 largest ports of Greece, for 35 years.
The town of Athlone in Ireland gave itself to be a trade hub that would give Chinese business an anchor in Europe. The Chinese $1.8 billion project will make the Irish town the largest European source of distribution Chinese-branded goods in Europe.”
Other minor Chinese acquisitions of European assets have also reached record high. The European technologies and expertise is expected to be transferred to Beijing and integrated into China’s industries.
“These sorts of deals used to be unusual, but as the balance of economic power shifts to Asia it’s going to be happening more and more. The Europeans will have to get used to it,” says Shada Islam, an expert on EU-Asia relations at the Friends of Europe think tank in Belgium.
Chinese Commerce Minister Chen Deming announced that Beijing would send a delegation to Europe soon to explore options for investing in state-owned infrastructure and European companies.
According to Mr. Chen, “European countries facing substantial debt are seeking to convert their assets into cash – and are looking to foreign investors for that capital. It is a fire sale that Chinese investors should closely watch and pushing forward the progress.”
While the Chinese investments in Asia, Latin America and Africa deal mainly with resources, Europe is a very different scene.
Wang Jun, an economist at top government think-tank CCIEE in Beijing said, “at this point, I think it’s too early to discuss. The eurozone crisis has not entirely played out and asset prices are very volatile. They have not found their floor. But overall, Europe is not a resources play, its manufacturers are what interest us most, their market, their technology, and their strong experience.”
China has overtaken the U.S. as the world’s largest manufacturing nation in 2010. It is now eyeing for one-third of global manufacturing output.
Robert Allen, a leading economic historian with Nuffield College, Oxford, said China’s return as world’s top manufacturer marked the “closing of a 500-year cycle in economic history”.
China has been the world’s no.1 manufacturing nation throughout most of human histories. The decline of China’s Ming dynasty in late-1500s plunged the country from one turmoil into another. The Mughals in India temporarily interrupted its manufacturing lead, but the newly established Manchu was able to put China back in shape. It was again overtaken by Britain in early 19th century, who in turn outpaced by the United States later.
“After 500 years of interruption, China has again stabilized itself as the workshop of the world. This fundamental shift is unlikely to be reversed by any other nation in the near future,“ Nicholas Crafts of Warwick University, an expert on long-term economic change, was quoted as saying.
Two prominent European leaders predicted the scenarios in the past. When the French emperor Napoleon Bonaparte uttered the famous words of warning 200 years ago, “Let China sleep, for when she wakes, she will shake the world,” few ever imagined he was referring to China of the 21st century. After World War II, British leader Winston Churchill repeated the warning on China, “”Beware the sleeping dragon (China) for when she awakes the Earth will shake.”
Currently, there is no more country in the world capable to challenge China in manufacturing, and the Asian giant is expected to go unopposed until 2050. Whether China can recapture that pivotal one-third share would depend on how it steers its trade and industrial policies in the next 40 years.
Nuff said!!
You guys should be thankful to us Indians if we start talking about history because we gave you your culture and we protected you from the Japanese to some extent. But blatant national pride and chest thumping makes you forget everything doesnt it? 
They have no idea what does "Culture" really stand for.
