Is China Still the World’s Sole Manufacturing Superpower After Covid?

China remains the world’s sole manufacturing superpower, but is losing ground.

Factful Friday 26 September 2025

By Richard Baldwin, Professor of International Economics, IMD.

Introduction.

A couple of years ago I wrote a VoxEU column with Rebecca Freeman and Angelos Theodorakopoulos pointing out a stark but under-appreciated fact: China had become the world’s sole manufacturing superpower.

That column, based on the OECD’s 2023 TiVA update, showed how China’s meteoric rise left even the combined heft of the G7 far behind. It also highlighted something many commentators still miss. China is not just the “world’s factory” for exports, it is increasingly its own best customer.

Fast forward to 2025, and the OECD has released fresh TiVA numbers, covering up to 2022. These allow me to check in on China’s superpower status.

Has the Covid shock, Biden’s industrial policy, and the broad push to China+1 sourcing dialled down China’s dominance?

Spoiler: China still dominates, but the ground beneath its feet is shifting.

China’s manufacturing dominance.

The left panel of the chart below delivers the headline result. Yes, China is still the world’s sole manufacturing superpower.

China still produces more manufactured goods than the next eight largest producers combined. That’s something of a slip since it was bigger than next 9 largest in 2020 according to the TIVA 2023 dataset, but I think China can still comfortably wear the uncontested crown.

Nevertheless, the chart make it clear that China’s rising trajectory has shifted. China’s manufacturing output rocketed upward until about 2015, then levelled off.

The right panel shows how global shares shifted between 2020 and 2022. Here the surprise is the US gain of nearly half a percentage point, a period that spanned Covid and President Biden’s industrial policy push. Other winners were India, Brazil, Russia, Mexico, and Vietnam. The losers were China, which lost almost a full point, Japan, which lost more than a point, and the usual suspects in Europe: Germany, France, and the UK.

The arc in detail: G7, China, India, Korea.

As mentioned, from 1995 to 2015, China’s ascent was nothing short of spectacular, but since the growth of its world share slowed. Logically, that means China’s manufacturing is now growing close to the world average.

A big headline is that the US manufacturing sector has been showing some pep in the last few years. It’s a small uptick post-Covid, but it is the first noticeable one for a decade or two. It is not clear whether it will continue. It is easy to track the output of US manufacturing right up to Summer 2025, but we don’t have data for the rest of the world and so cannot work out whether the US share is still rising.

Germany and Japan’s slow share erosion continues.

India is quite the gainer. Looks like “Make in India” is having some impact. The programme, launched in 2014, correlates with the rising world share of manufacturing. While there was a bit of a stumble around Covid, it is now back on an upward swing.

Korea’s share was stable for years but has edged down since 2018 despite a small Covid-era bump.

Vehicles: a sectoral twist

The OECD dataset ends in 2022, just before the miraculous surge in China’s EV production. But the story up to 2022 is still revealing. China became the world’s leading vehicle producer in the late 2000s. Note that this covers gross output in the sector that includes manufactured intermediates that China exported to other countries. Often the auto sector data counts final autos or the value of sales of final autos. Until recently, China was not making that many final autos.

Note that China’s edge in the vehicle sector, about a quarter of global output, is far lower than in manufacturing overall. The US, by contrast, has seen its share rising gently – in stark contrast to its decline in manufacturing overall.

Others have lost ground, like Korea, France, and the UK. Meanwhile, India has risen steadily; by 2022 its vehicle output exceeded France’s.

Sectoral dominance

Looking at China’s share across nine major manufacturing sectors reveals a mixed picture: over half of world textiles, but under 20 percent of furniture. Contrary to the popular narrative, the data do not show a dramatic exodus from low-value to high-value sectors, more a shuffle than a great leap.

Supply chains: exports and imports of industrial inputs.

Q: Why do we care about where goods are made? A: Because supply chains matter.

The OECD data show that China is the leader exporter and importer of industrial intermediate goods. In this sense, it dominates global supply chains.

However, this dominance is less resounding in intermediates than in overall production. Its share of global intermediate exports is about half its share of output, because China is a relatively closed mega-economy. Put differently: China is its own best customer.

Crucially, China’s export share of intermediates has not slowed as much as its overall manufacturing share. Engagement in global supply chains remains strong. On the import side, China is also the largest buyer of industrial inputs, but its share has dropped since 2020. The US share, in contrast, has ticked up. Other large importers are stagnant or slipping. Together, these facts underline that China’s role in global supply chains is still central, but the pace of its rise has eased.

Summary and concluding remarks.

This week’s Factful Friday is shorter than usual since this week’s travel was longer than usual.

I hope the message came through clearly. China remains the manufacturing superpower, Chinese manufacturing is losing ground. The world is not standing still.

And that’s it for another Factful Friday!

References.

Baldwin, R., R. Freeman, A. Theodorakopoulos (2024). China is the world’s sole manufacturing superpower: A line sketch of the rise. VoxEU. January 17.