China’s global share in advanced manufacturing is approaching one-quarter: this is not merely expansion in scale, but a shift in the center of industrial gravity

ITIF’s “Hamilton Index 2026” offers a conclusion that is both straightforward and stark: by 2022, China accounted for nearly one-quarter of global advanced-industry output, specifically 24.9%, compared with 22.3% for the United States. If the timeline is stretched further back, the shift becomes even more telling—in 1995, China’s share of global advanced industries was only 3.5%, and over three decades it expanded by nearly sevenfold.

For industrial research, this is not simply a matter of ranking who is stronger. It is more like a redistribution map of the global manufacturing network: the center of gravity of advanced industries is steadily shifting from traditional OECD economies to China and a small number of other manufacturing nodes. The 10 advanced industries tracked by ITIF include information technology and information services, computers and electronics, chemicals, machinery and equipment, basic metals, automobiles, metal products, pharmaceuticals, electrical equipment, and other transportation equipment. China ranks first globally in seven of these sectors, which means its advantages are no longer confined to a single industry, but span multiple critical links from upstream raw materials to midstream equipment manufacturing and downstream final assembly.

This broad-based leadership is more noteworthy than a single-point breakthrough. Competition in advanced manufacturing has never been a contest between isolated sectors, but the combined result of supply-chain density, supporting-infrastructure efficiency, engineering capability, and the ability to scale rapidly. ITIF’s report shows that in manufacturing-intensive sectors such as chemicals, machinery, and electrical equipment, China’s global share has already approached or reached one-quarter; in basic metals, China has controlled more than 40% of global output; and in machinery and equipment, China accounts for more than one-third of global output. These industries may not be the most glamorous high-tech tracks, but they are the foundation of nearly every high-end manufacturing system: new energy vehicles, wind power and energy storage, industrial robots, semiconductor equipment, electronic assembly, rail transit, and construction machinery all depend on these basic industrial capabilities.

In other words, the rise in China’s share of advanced industries cannot simply be understood as an export boom in one category, but should be seen as a deeper structural transformation: manufacturing is no longer merely a place for “processing and assembly,” and is increasingly becoming the organizational center of advanced industries, a supply-chain hub, and a platform for scaled innovation. ITIF’s report also points out that since 2018, China’s advanced-industry output has grown by more than 26%, higher than the global increase of 15.6%; if one excludes information technology services, where the United States still has an advantage, growth in the rest of the world was only 11.4%. The implication is clear: in manufacturing-related advanced industries, China’s expansion has been markedly faster than the global average, and faster than most developed economies.

From a global supply-chain perspective, this shift has a two-way impact.From the perspective of the global supply chain, the impact of this change is twofold. For multinational enterprises, China remains one of the irreplaceable manufacturing nodes, because it not only has scale, but also complete industrial-chain integration and engineering conversion capabilities. For the United States and its traditional allies, the risk lies in the changing “production-innovation” relationship within advanced industries. In the past, many countries relied on R&D and branding to occupy the high end of the value chain while outsourcing large-scale manufacturing; but when manufacturing itself becomes the site of technological iteration, process optimization, and systems integration, manufacturing capability is no longer just an outcome, but part of innovation capability. ITIF emphasizes in its report that this is not only about trade, but also about innovation, economic power, and national security.

Another noteworthy trend in the report is the continued decline in the relative share of OECD countries in global advanced industries. The OECD’s share of global advanced industry output fell from 86% in 1995 to 58% in 2022, a drop of 28 percentage points. Among these, base metals and electrical equipment stand out in particular, with market share declines of more than 40 percentage points. This shows that the “center” of global manufacturing has not disappeared, but its internal composition has changed: traditional industrial powers such as Europe, the United States, and Japan still retain local advantages—for example, the United States accounts for 36.1% of global output in information technology and information services, and maintains a leading position in pharmaceuticals and other transportation equipment—but in many manufacturing-intensive sectors, China has already formed a stronger scale advantage.

If we move one level deeper, what deserves the most attention is not the “share leadership” itself, but the way China’s advanced-industries structure is concentrated. ITIF uses the “location quotient” (LQ) to measure the relative concentration of a country’s advanced industries. China’s LQ is 1.36, meaning that the concentration of its advanced industries in the economy is 36% higher than the global average; the United States’ LQ is 0.88, 12% below the global average. These figures show that China is not simply “large in total volume”; rather, advanced manufacturing carries greater weight in its economy, is more tightly organized, and has longer industrial chains. This structural difference will directly affect future competition: in the next round of industrial competition, what often determines victory or defeat is not a single firm’s technological breakthrough, but the overall coordination capability from materials and equipment to components and systems integration.

This also explains why China’s advantages in automobiles, electrical equipment, machinery, base metals, and chemicals continue to spill over into emerging sectors such as new energy, energy storage, industrial automation, and high-end equipment manufacturing. Advanced industries are not isolated from one another; they share the same industrial foundation. The scale advantages of base metals, chemicals, and electrical equipment often mean lower supporting costs, faster trial-and-error cycles, and stronger mass-delivery capabilities; and these capabilities are precisely the important preconditions for the continued expansion of the industrial chains for new energy vehicles, photovoltaics, wind power, energy storage, and industrial robots.From an international comparison perspective, the performance of Taiwan, South Korea, and Vietnam also points to changes in the division of labor within the global manufacturing network. Taiwan ranked first overall in 2022, with a location quotient of 2.63, driven mainly by semiconductors; South Korea ranked second at 2.17, with strengths spread across multiple advanced industries such as electronics, automobiles, and machinery; Vietnam ranked third at 1.82, with the fastest growth in computer and electronics manufacturing, as its location quotient rose by 44 percentage points from 2013 to 2022. This pattern shows that global supply chains are not simply “de-China-izing,” but rather forming several complementary nodes outside China-led manufacturing-intensive systems. However, these nodes are more about taking on specific segments than fully replacing the whole.

For global buyers and manufacturing managers, this round of change means that procurement logic is also shifting. In the past, supply chain management emphasized low cost and single-source efficiency; now, more companies are beginning to consider production capacity stability, geopolitical risk, delivery flexibility, and the pace of technological iteration at the same time. China’s scale advantage in advanced industries will continue to strengthen its role as a “basic supply center” in the short term; on the other hand, external market concerns about dependence on critical industries will continue to rise, pushing some companies to adopt “China +1” strategies, regional diversified sourcing, and localized manufacturing.

However, based on industrial realities, this adjustment is more likely to take the form of “partial diversification, overall dependence” rather than complete substitution. Once industries such as chemicals, machinery, electrical equipment, base metals, and automobiles are involved, these highly interwoven supply chains mean that what is truly replaceable is not a single production line, but the entire supporting ecosystem. The reason China has been able to lead multiple advanced industries at the same time is not just scale, but also the depth of industrial supporting capacity built up over time, the engineer dividend, industrial infrastructure, and the ability of local governments to promote industrial clusters.

Therefore, the more important takeaway from this report is not to confirm an already well-recognized fact—that Chinese manufacturing is strong—but to show that global competition in advanced industries has entered a new stage. The core of this stage is no longer simply “who can make it,” but “who can keep making it at scale, make it stably, and iterate quickly.” On this point, China’s advantages are still expanding; and if the United States and its allies want to narrow the gap, what they face will not just be a trade policy issue, but the challenge of rebuilding an industrial system.

From the perspective of the next two to three years of supply chain developments, the trends highlighted by the ITIF report will continue to affect at least three types of industries: first, the new energy and electric vehicle chain, especially batteries, power devices, body materials, and industrial equipment; second, the machinery equipment and industrial automation chain, including robots, CNC machine tools, transmission and control systems; third, upstream foundational industries such as chemicals, base metals, and electrical equipment, which determine whether Chinese manufacturing can continue to maintain its triple advantages of scale, cost, and delivery.This means that the rising global share of China’s advanced industries should not be viewed as a static ranking, but rather as a phased result of the restructuring of the global industrial system. For China, the next stage should not be simple capacity expansion, but rather enhancing independent technological capabilities, standards-setting capabilities, and global supply chain organization capabilities in higher value-added segments; for the outside world, it will be necessary to re-evaluate one fact: competition in advanced manufacturing is shifting from a small number of high-tech industries to the broader industrial system itself.