China's efforts and investments in advanced industries have paid off as the country continues to gain market share in sectors including computers and electronics, chemicals, base metals and motor vehicles, according to a report released by ITIF on December 13.

As of 2020, China is the world's leading manufacturer, with 7 out of the 10 industries covered in the report.

According to the report "China's Great Success with Strategic Industries" , China is the world's leading producer of computers and electronics; chemicals; machinery and equipment; motor vehicles; base metals; fabricated metals; and electrical equipment.

Meanwhile, the US is the world's leading producer of pharmaceuticals, information technology (IT) and IT services, and other means of transportation.

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China leads 7 global strategic industries thanks to strong efforts and investment. (Photo: SCMP)

The rest of the world outperforms China only in pharmaceuticals and IT, IT services. However, this may not be sustainable as the Chinese government has targeted biopharmaceuticals and artificial intelligence as key industries for development.

“China now dominates the strategically important industries in ITIF’s Hamilton Index, producing more than any other country in absolute terms and more than all but a few others in relative terms,” ITIF noted.

ITIF's Hamilton Index ranks 40 countries on their relative performance (LQ) in 10 strategically important and advanced industries, accounting for more than $10 trillion of global manufacturing in 2020.

These 10 industries accounted for 11.8% of the global economy in 2020, compared with 11.9% in 1995, according to the organization.

In 2020, China produced 47% more than the global average based on the size of its economy in 10 industries, while the US produced 13% less than the average, the report said.

To match China’s share of the advanced industries economy, US output would have to increase by $1.5 trillion, or 69%. This would require doubling output from all 10 industries except IT and information technology services.

“China’s rapid growth in market share across the 10 industries in the Hamilton Index mirrors the rapid decline of the US, G7 and Organisation for Economic Cooperation and Development (OECD) as blocs,” ITIF said.

The US-based think tank is lobbying Washington to come up with a national industrial strategy to ensure better competition with China.

“But despite the passage of the Chips Act, the political will in the US to implement and fully fund such an agenda appears to be relatively low, especially since neither political party is willing to address the massive budget deficits that would free up the funding needed for such a strategy,” the ITIF report continued.

In July 2022, the US Congress passed the Chips and Science Act (CHIPS Act), funding $52.7 billion for domestic semiconductor research, development, manufacturing, and workforce development.

China's huge investment in electric vehicles is also paying off and it ranks as the world leader in global motor vehicle production, with a market share of 24.3% in 2020, higher than the 14% in the US, 12.6% in Germany and 10% in Japan.

The US retains its lead in the “other transportation” category, particularly due to its dominance in aerospace manufacturing, with 34.5% of output in 2020.

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Vietnam's market share in 10 strategic industries. (Photo: ITIF)

In the 2020 Hamilton Index, Vietnam has a relative performance score (LQ) of 0.83. From 1995 to 2020, Vietnam's LQ increased by 0.11 percentage points, placing it among the group of improving countries.

In addition, ITIF also assessed Vietnam as a “relative leader” in the electrical equipment industry with an LQ of 2.36. The leading country in this industry is China with a market share of 36.1%.

The ITIF report devotes a separate section to notable manufacturing countries, including Vietnam. In terms of industrial strength, Vietnam ranks above average in two areas, namely electrical equipment (LQ 2.36) and computers and electronics (LQ 1.69).

Two relatively strong and growing industries since 2008 are computers and electronics, electrical equipment. Another growing industry is motor vehicles.

(According to SCMP)

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