China’s Dominance in Strategic Industries and Global Market Share

The Information Technology & Innovation Foundation (ITIF) has recently published a report which highlights China’s increasing dominance in strategic industries and its rapid gains in global market share, particularly in advanced sectors related to computers, electronics, chemicals, and motor vehicles. The report reveals that in 2020, China emerged as the world’s leading producer in seven out of ten industries covered, surpassing the United States and G7 nations. This trend underscores China’s significant progress in capturing a larger share of the global market in critical industries.

In accordance with the ITIF’s Hamilton Index, which ranks the performance of 40 countries in advanced and strategically important industries, China’s production exceeded the global average by 47% based on the size of its economy. In contrast, the United States fell short, producing 13% less than the global average across the ten industries. The report also highlighted the US’s need to expand its output by $1.5 trillion to match China’s advanced-industry share of the economy, representing a 69% increase.

Although the US Congress passed the Chips and Science Act in July 2022, allocating $52.7 billion for semiconductor research, development, and manufacturing, the political will to fully implement a national industry strategy remains uncertain. The ITIF has warned that without a comprehensive agenda to support competitiveness, the US risks further decline in global market share, particularly in comparison to China.

China’s aggressive pursuit of strategic industries, including biopharmaceuticals and artificial intelligence, has led to its rapid growth in market share, presenting significant challenges for the US and other developed nations. The report has also drawn attention to Taiwan’s potential to benefit from reshoring opportunities spurred by the Chips Act, indicating potential shifts in global market dynamics.

Furthermore, Mexico’s performance in the motor vehicles category has been remarkable, benefiting from the relocation of production from the US and Canada. On the other hand, the US has maintained its lead in the “other transportation” category, particularly in aerospace manufacturing. China, however, has emerged as the second-highest ranking nation in this category, driven by expansion in high-speed rail and shipping.

In conclusion, the ITIF’s report sheds light on China’s formidable position in strategic industries and its escalating global market share. As China continues to outpace the US and other developed nations, it is crucial for policymakers to consider effective strategies to bolster competitiveness and foster innovation in key industries. Failure to address these challenges may result in further decline and loss of market share for the US and other G7 nations, ultimately impacting their economic strength and influence in the global market.