China’s electronics export juggernaut and lessons for the US

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In 2021, China's electronics exports exceeded those of the other five leading exporters combined. This column analyses the rise of China as a centre for electronics manufacturing. It argues that the key drivers of growth were intense competition, education that facilitated technology transfer, and infrastructure development. However, China's nonlinear innovation model also leaves it dependent on foreign technology and vulnerable to protectionism from other countries. To forestall protectionism, China should nurture domestic consumption. Other countries, including the US, should promote manufacturing by focusing on incentives, education, and infrastructure.

The value of China's electronics exports increased from $5 billion in 1990 to $1 trillion in 2021. In 2021, its electronics exports exceeded the electronics exports of the other five leading exporters combined. Figure 1 shows the electronics exports of leading producers.

Not only has the value of China's electronics exports increased, but so too has China's value added in these exports. Xing (2021) discussed how, when the first iPhone came out in 2007, China's only contribution was a $6.50 per phone assembly fee to Foxconn. Many of the parts and components came from firms in Japan, South Korea, Taiwan, and other Asian economies. By contrast, for Apple's 2022 list of input providers, 151 suppliers resided in China.

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