China's scale of business is completely different from that of its neighbors,' said an article published Nov. 18 on the website of Japan's Nikkei Asian Review magazine. China's manufacturing competitiveness has a very broad basis; The continued growth of China's manufacturing prowess poses profound challenges for both developed and emerging market neighbours. The full text is excerpted below:

The idea that China has passed its manufacturing peak is both persistent and misleading.

China's manufacturing sector is in fact extremely resilient, as evidenced by its continued growth and global export competitiveness. China's manufacturing sector has survived trade wars and tariff wars largely unscathed, and has begun to plan ahead to prepare the country for a long-term lead in manufacturing everything from cars to consumer electronics.

It is true that some manufacturing has moved from China to neighbouring countries. Supply-chain changes, however, do not appear to have had a negative impact on China's growing manufacturing sector.

In part, this reflects the fact that China operates on a completely different scale from its neighbours. Its manufacturing output is greater than that of the rest of Asia combined. Japan, the region's second-largest manufacturing power, produces only a quarter of China's output. India, despite its efforts to develop a manufacturing base under the "Make in India" initiative, produces only about a tenth of China's output. While Vietnam's manufacturing growth has been impressive, its industrial base is a fraction of China's and is concentrated in relatively few products.

In this respect, the shift of some production to neighbouring countries has not damaged China's manufacturing base. In fact, contrary to the view that the peak of Chinese manufacturing activity has passed, the manufacturing sector has been revitalised in recent years. Between 2016 and 2019, Chinese manufacturing output in local currency terms grew at its fastest pace in three years since 2013, with particularly strong growth in 2017 and 2018.

China's share of global manufacturing exports has actually increased since 2016, to 18% in 2019, the second-highest level in the past two decades.

That is an increase unmatched by any other big exporter. Germany, the US, Japan and South Korea all lost their share of global manufacturing exports over the same period. Within Asia, The value of China's exports has also risen more since 2016 than the rest of the region combined.

The competitiveness of China's manufacturing sector is broadly based. Its global exports of all kinds of goods, from labour-intensive to technology-intensive, are still growing, and in fact China's share of the global export market for the vast majority of manufactured goods has increased over the past three years, including many textile-related products, which are probably the most vulnerable to factories moving abroad.

But, at the same time, China has built local competitiveness in a growing number of areas of skilled and technology-intensive manufacturing activity. In many of these manufacturing sectors, Chinese companies are gaining international leadership through technological innovation and product development. This is reflected in their increased competitiveness and share of global exports.

China's continued manufacturing prowess poses profound challenges, not to mention policies, for its developed and emerging market neighbours alike. The development and maintenance of internationally competitive manufacturing is the core content of economic growth. China's industrial policies and potential international competitiveness have affected the more developed economies of Asia, and advanced export-oriented industries have been largely replaced.

So the real question is how Asia will find the right way to adapt to the consequences of China's aggressive industrialisation and unmatched competitiveness. Their response will determine whether China's position at the top of the regional, if not global, manufacturing hierarchy is unbreakable.