The Soviet Union, Japan, and the European Union all seemed to be challengers to our dominant position in the world. They all faltered. Now China threatens our dominance. How is that working out?
China still hasn't surpassed us in manufacturing output (tip to Samuelson):
According to World Bank estimates, the United States retained its position as the largest manufacturing nation in 2010, with value added of $1.8 trillion, closely followed by China. Japan ranked third in manufacturing value added at $1.1 trillion (see Figure 1). Germany is the only other country whose manufacturing sector is more than one-fifth the size of those in the United States and China.
We're still a manufacturing power. We use far fewer people to produce things, but that is a major reason we are still a manufacturing power.
I noted this counter-intuitive fact two years ago. What is interesting is that two years ago our manufacturing sector was 40% larger than China's. How did that change to just barely bigger in two years? Either that is very disturbing or China's output is warped by stimulus spending to combat the financial crisis of 2008 and recession of 2009.
And while we overtake Saudi Arabia in oil production (tip to Mad Minerva), China will overtake us in oil imports next year:
The Organization of Petroleum Exporting Countries (OPEC) said in a report this week that it now expects China to overtake the U.S. in terms of oil imports next year. The report estimates that China will be importing 6 million barrels a day (bpd) by the end of the year, and that U.S. imports—which declined by 21 percent in 2012—will drop below the 6 million bpd mark in 2014. The report also said that China may have to import as much as 60 percent of its oil needs this year.
Which makes China's rapid increase in naval power understandable. It is no less worrisome to us or our allies since a fleet capable of defending oil imports from Africa and the Middle East can threaten our use of the seas, of course. That's a problem with dealing with a communist dictatorship.
So get used to more of this:
Attack submarines from the Chinese navy are becoming increasingly active in the Indian Ocean Region (IOR) and could pose a “grave threat” to Indian interests there, a report by the Indian defense ministry said last week.
The Indians are jumping the gun on worry. But the trend is clear. India will need to get used to bumping into Chinese navy vessels in their own backyard.
But China's forays into the Indian Ocean (including anti-piracy patrols off of Somalis, recall) should remind us that pivoting to the western Pacific, while surely useful to bolster allies in the western Pacific, ignores the fact that it is far easier to interdict Chinese energy imports from the relative safety of the Indian Ocean where Chinese land-based anti-ship weapons can't reach us. And that reality applies to Indian naval power, too.
