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Another article written by Helen Wang
People often compare China’s urbanization to Western industrialization in the 19th century. In both cases, a large population moved from the country to the city. Society advanced from agricultural to industrial via manufacturing on a massive scale.|
However, there is a key misconception about China’s manufacturing power.
In the United States and Europe, the manufacturing industry was created due to technology innovation. For example, railways came into existence because of the invention of the steam engine and automobiles were created because of technology breakthroughs in automobile engines.
In China, the manufacturing industry is being created in response to global demand. Chinese manufacturers take orders from Western companies that have designed products for their home markets. They have no involvement with product development, innovation, market research and even packaging. Chinese manufacturers have no experience in bringing their own products to overseas markets.
Unlike the manufacturing industry in the West that gave birth to a middle class of both white-collar and blue-collar workers, manufacturers in China mostly absorb surplus labor from rural areas with few skills. Those rural migrant workers live in dormitories, earn very low incomes (about $100 to $200 a month) and hardly fit into the category of the middle class.
While people in the West fear China as a global manufacturing powerhouse, the Chinese consider their manufacturers to be the sweatshops for the world and see themselves as being in a disadvantageous position.
Contrary to the conventional view, manufacturing in the U. S. has been growing in the past two decades despite the decline in manufacturing jobs. The latest data show that the United States is still the largest manufacturer in the world. In 2008, U.S. manufacturing output was $1.8 trillion, compared to $1.4 trillion in China. This means that the United States is producing goods with higher value, such as airplanes and medical equipment.
In addition, most jobs the U. S. lost to China are low-skilled jobs. By outsourcing those low-skilled jobs to China, Americans have actually become more competitive in high-skilled jobs such as management, innovation and marketing. The low-skilled jobs also serve China well as Chinese rural migrants have opportunities to move up in life and gain some skills.
The results are mutually beneficial. On one side of the globe, hundreds of millions of Chinese rural migrant workers earn more and have a higher standard of living; their children have more training, which leads to more growth. On the other side of the globe, Western consumers are able to afford goods at lower prices and enjoy lower inflation.
For more, see Myth of China's Manufacturing Prowess.