ABSTRACT
Few changes in the global economy seem as transformative as China’s emergence as a “shop floor” for the world. China’s ascent as a manufacturing powerhouse, occurring far faster and in far more complex industries than experts had ever imagined, has brought clear advantages to consumers worldwide. A host of high-quality goods, from apparel and home appliances to the most sophisticated electronic devices, are now available at unprecedented low costs. Yet, it is not the story of consumer benefits that captures much of the world’s attention. Instead, it is the competitive challenge posed by China’s rise. Chinese firms seem poised to supplant long-established counterparts in developed markets, and entire industries appear to be moving en masse to the Chinese Mainland. Whether in Europe, the Americas, or much of East Asia, concerns abound that China’s rise is precipitating the “hollowing out” of entire national economies, an erosion of industry that leads not just to job loss, but to the loss of capabilities long understood as the foundation of economic and national strength.
