China stakes out a new manufacturing model

China is making more complex products at breakneck speed and unprecedented scale, transforming itself into the world’s second-largest economy. It now has an ambitious plan to go even further, by trying to upend the traditional economic order and create a global powerhouse that can dictate the rules of trade. It’s not just about growth. It’s also about national security and self-sufficiency. China wants to build homegrown champions in cutting-edge industries that rival Western giants like Apple and Qualcomm. While China has a long way to go, the Communist Party is bringing the full financial weight of the state and forcing other countries to play defense. In doing so, China is staking out a new manufacturing model. Economic textbooks lay out a common trajectory for developing nations. First they make shoes, then steel. Next they move into cars, computers and cellphones. Eventually the most advanced economies table semiconductors and automation. As they climb up the manufacturing ladder, they abandon some cheaper goods along the way. That’s what the United States, Japan and South Korea did. But China is defying the economic odds by holding onto them. Look at the evolution of what China sells to the rest of the world. As it ramped up its manufacturing engine in 2000, China was pretty good at making basic products like toys and umbrellas. By 2016, China had moved into more expensive goods like cellphones and computers, while making more of the cheaper stuff.