Is China’s Manufacturing Strengthen: A Future of Supply Chain Network?

The global supply chain is one of the most crucial factors in the modern era for connecting business to business, countries to countries, and people to people through a network to supply resources. The concept and need of the supply chain date back to ancient times, when human society began trading goods, connecting distant regions with systems of transportation and exchange.

In modern times, the export and import goods dependency increased drastically to meet demand and supply needs. The US, emerged as the largest supplier of goods to the world, dominating the global supply network with robust manufacturing capacities, state-of-the-art infrastructure, efficient logistics, and strategic positioning. However, China has overtaken the US to become the world’s leading supplier of goods, let’s understand.

China: The Global Supplier of Goods

The World Trade Organisation aims to connect the world economy through a web for easy supply of goods, allowing developing and least developed countries access to the markets of advanced and Western economies. This goal was fuelled by the foundation of the World Trade Organisation in 1995, which aimed to reduce tariffs and trade barriers to create a business-friendly platform for fair trade. 

However, the Chinese government understood the need for an open economy much earlier than the WTO. In 1978, they opted for economic liberalization policies under the “Open Door Policy” to allow foreign investment and trade. This policy enabled China to export its goods globally with greater market access, making it the global supply chain leader.

China’s Exports to Overtake US

The US still dominates the global export market with the power of its dollar acceptance worldwide. But, in terms of export value, and market coverage, China’s goods exports have overtaken US exports in 2008-09 with $2.63 trillion of exports to the world. Let’s take China and US export values –

1. China and the US, collectively handle more than 40% of the global export market with export values of $3.57 and $2.06 trillion respectively in 2024.
2. China’s goods exports in 2008-09 surpassed US exports in value with a gap of around $280 billion.
3. China and US goods exports to the world decreased by $230 and $140 billion respectively in 2016-17, compared to 2014-15.
4. China’s exports increased by 42.2 % globally compared to US exports.
5. Notably, China’s exports to the world increased with a significant growth rate despite geopolitical challenges, the energy crisis, and trade wars with the US and the EU.

This significant growth, highlights China’s economic resilience to sanctions, trade barriers, and emerging challenges, making China, the leading player of the Global supplier.

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China: The Leading Supplier of Electrical & Automotive Goods

China undoubtedly dominates the global electrical market consisting of machinery and equipment. The export value of this sector is more than the country’s total export value. For instance, in 2024, China’s export value for this segment stood at $928, more than India’s total merchandise export. Here’s the breakdown of export value –

1. The export of electrical machinery and equipment from China increased by 3.2% in 2024, compared to 2023.
2. As the world is adopting sustainable energy sources, the supply of nuclear reactors and boilers seeing significant growth.
3. China has complete domination in this sector with an export value of $568 billion in 2024, an increase of $16 billion from 2022.
4. China with its advanced economic manufacturing, and technological advancement has outperformed the major vehicle exporters. For instance, vehicle exports from China to the world stood at $216 billion in 2024, up from $150 billion in 2022.

Notably, since the open-door policy, China has completely transformed its economy and established itself as a major global supplier of electrical and automotive goods. This gives China a competitive edge in this dynamic market and the strength to stay calm even during the global supply disruption.

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China: A Market View on Agricultural and Agro-based products

China dominates the electrical and automotive goods industry and the export of agricultural and agro-based products, after the USA. For instance, export value in this segment increased by 43.7% or 26.8 billion in 2024, compared to 2020.

On the other hand, the supply of processed food and agro-based products also strengthens its position in the global market. For instance, the export value for this segment stood at $40.2 billion in 2020, which increased by $13.2 billion in 2024, a growth of 32% in the last five years.

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China’s unmatched manufacturing power undoubtedly established the country as a global supplier of goods, from electronic products to agricultural goods along with a major supplier of rare earth minerals. This enables the Chinese economy to control or manage the global supply of major goods.

Factors that Support China as a Global Supplier

Several factors support China’s rise as a global factory and a dominant global supplier is the result of years of hard work, economic and monetary policies, etc. Here are the key points –

Manufacturing Ecosystem –

Over the years, China has established a well-developed comprehensive, and efficient manufacturing ecosystem for producing goods at affordable prices. Further, cities and regions have developed for specific products and industries, creating clusters of suppliers, and skilled workers.

Environment, Social, and Governance (ESG) – 

To understand the importance of industrialization in the early stage of economic development. China implemented a less stringent regulatory framework, allowing industries to expand rapidly, creating a strong manufacturing base, and economic prosperity. This, in turn, provided resources, and capacity to address those challenges effortlessly. For instance, China aims to be a carbon-neutral economy by 2060. 

Government Support –

Since 1978, the Chinese government initiative has helped the country to attract foreign businesses to invest in China by providing tax incentives to support export-oriented industries.

Availability of Raw Material –

China enjoys a strategic position and a god-gifted land with natural resources, rare earth minerals, deep-sea resources, etc. This reduces China’s dependency on imports and streamlines the production process.

Technological Advancement –

With establishing itself as a global factory, China has developed and state-of-the-art technologies for artificial, robotic advancement, automatic for efficiency and competitiveness.

Cost Effective Labour –

Cost-effective labor is the major reason behind China’s rise as a global factory and a supplier. This enables China to produce high-quality goods at competitive prices.

Conclusion –

China’s technological advancement, automation, manufacturing, world-class cities, efficient logistics, and special economic zones are the growth factors, that establish China as the leading global supplier.