AI or no AI, China’s manufacturing engine to stay in the lead

From Dan Wang’s China notes, July ’23: on technological momentum:

Americans are now integrating these [AI] tools into their lives. And they will start showing up in productivity statistics, perhaps even soon. The longer that most Chinese are unable to work with them, the greater the risk that China will be left behind in some way…

Though China is without reply to novel AI technologies, the US should stay vigilant in a protracted technological contest with a peer competitor. That is the premise of an op-ed I’ve just written for the New York Times. Summary: “If there is ever a serious disruption to trade, it’s far from obvious that American prowess in AI will overcome China’s strength of a large and adaptive manufacturing base.”

It is the weight of this large and adaptive manufacturing base that buttresses my constructive view on China’s technology development. China continues to suffer weaknesses in semiconductors, aviation, and a few other strategic technologies. But it is gaining strength in so many other sectors. My favorite examples to cite are three. Due to its prowess in electric vehicles, China is on track to surpass Japan as the world’s largest auto exporter in 2023, after edging out Germany last year…

More insights in the full post from Dan Wang.