China leads in 7 of 10 strategic industries in 2020, says report

The Information Technology and Innovation Foundation (ITIF) released a report, "The Hamilton Index, 2023: China is Running Away With Strategic Industries," saying that China led in seven out of ten industries that the Hamilton Index deemed strategically important, except for IT and Information Services, Pharmaceuticals, and Other Transportation, three industries led by the US.

According to the report, China's output share in the ten Hamilton industries in the world increased from 3% to 25% during 1995 and 2020, with OECD nations falling from 85% to 58%, implying China's gain at the expense of the OECD. Notably, between 2017 and 2020, China's output in the Hamilton industries surged by 17%, while the rest of the world rose by only 2%. Excluding the IT and Information Services led by the US, China's output for 2017-2020 grew by US363 billion, while that for the rest of the world dropped by US$107 billion.

According to the report, China is 70% more specialized than the US in advanced industries, and ITIF estimated the US output should increase by 69%, or US$1.5 trillion, to match China.

According to the report, there's limited time to reverse the fate of the advanced industry in the US. The upcoming decade, the 2020s, holds the key as China could secure a significant global market share. This could permanently weaken the production capabilities of the US and its allied nations.

For other economies, Taiwan, followed by South Korea, topped the list in the relative national performance in the composite Hamilton Index, which introduces the location quotient (LQ) measure to reduce the impact of the difference in the size of the economy. Other economies with relatively good performance include Singapore, Switzerland, China, Germany, and Japan.

Source: ITIF, December 2023

Source: ITIF, December 2023