How Did China Become The World Leading Manufacturing Superpower?

"Products made in China are cheap through the exploitation of the workforce. Every time we shop, we are driving the nail further into the coffin of American manufacturing jobs." ~ Joe Baca

"We've lost an edge that we used to have in scientific innovation applications to goods to be sold. In many ways, that is also changing in the electronic field. Almost all of the materials that we use now are of advanced technology, I have an iPad and also an iPod, both of which are made in China. Although we have designed them here with Apple, for instance, they are manufactured overseas." ~ Jimmy Carter

China's industrial success originates from a state-led approach to its socialist market economy. From working in tandem with state planning, state ownership, and private ownership, together with competition from free markets, China effectively came to excel in mastering its industrial policy.

Prior to the pandemic, China spent 2% of its GDP on industrial policy, while the U.S. and Canada spent less than 0.3%. China has spent tens of trillions of dollars on world-class infrastructure and free public education from kindergarten to university in the past decade. Many of their universities are considered in the top 100 in the world. The government has also established specialized job training programs to prepare workers for manufacturing and high-tech industries.

China also emphasizes research and development through the encouragement of private-sector investment in scientists and engineers. Government and private companies both invest to encourage and develop innovation, such as research and development in hundreds of different areas of the economy and across all four sectors.

Canadian and American governments have used tax cuts and deregulation, on the other hand, rather than a grand industrial policy. This policy is essentially indistinguishable from Thatcherite neoliberalism or Reaganite neoconservatism, is not a good model for industrial growth.

State-directed industrial policies were used by both the U.S. and Canada during the 1940s and '50s in combination with government investment and market incentives. If they are to recreate their industrial foundation, they would have to revert to that scheme, direct state investment combined with strategic market engagement. But governments of Canada and the United States would shy away from such a proposal. They would call it socialism without even knowing, in fact, historically, both countries built enormous infrastructure in the 1940s up to the '60s, with private industry and the government combined in the context of a jointly planned industrial policy.

Unless there is government planning and intervention, it is unlikely that rich millionaires and billionaires will invest voluntarily in building factories and manufacturing to compete with China's dominant industrial economy.