Understanding the Essence of Chinese Manufacturing: A Comprehensive Analysis
To truly understand the essence of Chinese manufacturing, we must examine two key case studies.
Case 1: The “God Bless the USA” Bible
Former President Donald Trump widely promoted the “God Bless the USA” Bible, which was inexpensively printed in China.
According to an October 9 report by the Associated Press, Trump announced a collaboration with country singer Lee Greenwood to promote a Bible inspired by Greenwood’s patriotic song, “God Bless the USA.” This Bible includes the U.S. Constitution, the Declaration of Independence, the Bill of Rights, and the Pledge of Allegiance.
Trump urged supporters to purchase the $59.99 Bible, emphasizing the need to “bring manufacturing back to America.” Ironically, these Bibles were printed in China—the same country Trump has often accused of “stealing American jobs” and engaging in unfair trade practices.
Customs data reveals that these Bibles, printed by New Ade Cultural Media in Hangzhou, were exported to Freedom Park Design in Alabama. The estimated cost per Bible was under $3, yet they sold for $59.99, generating potential sales of approximately $7 million. Buyers who requested Trump’s autograph paid $1,000 per Bible.
When questioned about this decision, Oklahoma Department of Education spokesperson Dan Isett said, “There are hundreds of Bible publishers in the U.S., but China offers the lowest costs, so it’s not surprising Trump’s version was printed there.”
This highlights a critical reality: Chinese manufacturing’s low cost remains its only competitive advantage in traditional industries like book printing.
Case 2: TSMC and the Rise of Advanced Manufacturing
On the other hand, the U.S. dominates advanced manufacturing, as evidenced by Taiwan Semiconductor Manufacturing Company (TSMC).
On October 9, Bloomberg reported that TSMC’s Q3 revenue surged 39%, driven by high demand for AI chips. TSMC earned $23.6 billion, surpassing forecasts, fueled by strong orders from companies like Nvidia, Apple, Qualcomm, and MediaTek. High-performance computing, largely driven by AI demand, now accounts for over half of TSMC’s revenue.
TSMC produces cutting-edge chips used in AI, including Nvidia’s GPUs. To meet demand, TSMC has invested $65 billion in three U.S. chip plants for 5nm and 2nm technology. The first facility began trial production in August, with yields exceeding expectations.
This underscores the U.S.’s leadership in advanced manufacturing. Unlike traditional industries, the U.S.’s strength lies in technological innovation and its ability to lead global advancements.
Key Takeaways:
- China’s Role in U.S. Supply Chains is Limited to Low-End Manufacturing
Despite political rhetoric, China remains an essential part of U.S. supply chains for low-cost traditional manufacturing. However, its role is limited to price-sensitive sectors, as demonstrated by Trump’s Bible project. - The U.S. Leads in Advanced Manufacturing
Advanced manufacturing integrates high-tech innovations across all stages, from product design to production. Industries like semiconductors showcase the U.S.’s unparalleled leadership in cutting-edge technologies. For example, TSMC relies heavily on U.S. companies like Nvidia and Apple for its advanced chip orders. - Traditional Manufacturing is Easily Replaced and Relocated
China’s traditional manufacturing dominance is fragile. As companies seek nearshoring and diversify supply chains, countries like Vietnam, India, and Mexico have gained market share. The U.S. now imports more goods from Mexico and Canada than China. - Structural Reform Requires Higher Personal Incomes
To address oversupply in traditional industries, China must shift investments toward improving domestic incomes and boosting consumption. A stronger domestic market would also organically support the growth of advanced manufacturing industries. - Economic Insights from China
- China’s social retail growth was only 3.4% in the first eight months of this year, while real estate sales plummeted 23.6%.
- Meanwhile, manufacturing output grew 6.1%, indicating an oversupply problem.
Conclusion
China’s manufacturing sector must move beyond traditional industries. Instead of boasting about global manufacturing output, it’s crucial to focus on sustainable growth. Reducing unnecessary investments in both traditional and advanced sectors and redirecting resources to improve domestic income and consumption is the key to long-term success.
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