Manufacturing Update - 29 May 2025

Insights from articles and reports, excerpted and summarized, of interest on manufacturing technology, management, policy, and economics in the US and abroad.

Content:

1. 1. TARIFFS HIT MANUFACTURING: “Tariffs Push Manufacturing into Stagnation through 2025: ISM Forecast”

2. TARIFF EFFECTS AND CURRENT LEVELS: “The State of Tariffs – May 2025”

3. WHAT IS CHINA’S RESPONSE? “China’s Plan to Fight Trump’s Trade War”

4. FILLING MANUFACTURING JOBS: “Why Aren’t Americans Filling the Manufacturing Jobs We Already Have?”

5. GM ENTERS THE BATTERY COMPETITION: “GM’s New Battery Technology Could Be a Breakthrough for Affordable EVs”

6. THE EXPORTS TO CHINA THAT WILL BE HARD HIT BY TRADE WARS: “20 Key Products China is Heavily Dependent on for Imports,”

7. CHINA DOMINATING GREEN ENERGY TRANSITION: “How China's Powerslide is Driving the Global Green Electricity Transition”

8. TROUBLE IN US FACTORY AUTOMATION AND CONSTRUCTION: “Factory Fantasies: The Trouble with MAGA’s Manufacturing Dream”

1. TARIFFS HIT MANUFACTURING

“Tariffs Push Manufacturing into Stagnation through 2025: ISM Forecast,” Kate Magill, Manufacturing Dive, May 19, 2025

Manufacturing revenue will remain relatively flat through the end of the year, according to an economic forecast out last week from the Institute for Supply Management. Revenue for the year is slated to grow by only 0.1%, as tariffs drive up prices and spread uncertainty. The outlook is a significant drop from ISM’s annual forecast for 4.2% growth shared in December, and lower than the 0.8% growth seen last year. Raw material prices are set to skyrocket 7.5% this year, according to the forecast, driven up in large part by the Trump administration’s tariffs. “We’ve gone into another liquidity year, rather than a productivity year, all driven by tariffs,” said Timothy Fiore, former chair of the ISM’s manufacturing business survey committee.

The outlook stands in contrast to the optimism seen for the industry at the start of the year, when ISM’s Purchasing Managers’ Index, a key indicator of economic health, reentered growth mode for the first time in more than two years. Since then, however, the industry has been on a downward slide. Industry confidence and consumer demand have both fallen amid the Trump administration’s tariff policies, leading manufacturers to pull back on production.

Tariffs dominated survey respondents’ concerns for both the April ISM PMI and the forecast survey, as manufacturers remain preoccupied with the policies’ impact on metrics like production and export orders. “When we started the year, we thought the second half would be better than the first. That’s not what we’re seeing here, because we’re seeing continual price inflation through the second half of the year,” Fiore said. “I don’t see this as a good manufacturing year at all.”

The higher costs are pushing manufacturers to pull back on spending – ISM survey respondents expect capital expenditures to drop 1.3% this year, down from a December 2024 projection of a 5.2% increase. Other industry analysts are also highlighting the stalled growth caused by the tariffs. During a webinar hosted by analysis firm Omdia on Monday, senior research manager Joanne Goh said the levies are causing many companies to hit pause on new investment. The result has been a delay on an industry bounce back. “When tariffs hit, everything got delayed. The earliest recovery we are expecting is 2026,” Goh said.

Manufacturers have yet to initiate widespread layoffs, with employment expected to remain relatively stable, with only a 0.1% dip. Fiore, however, is less optimistic, saying he believes there could be more job losses later in the year as manufacturers feel the squeeze of lower demand and higher input prices. “In a liquidity year, employment is going to drop,” he said. “The only way to work through this is by passing prices through or improving productivity, and it’s really hard to improve that in a contracting environment.” In ISM’s forecast survey, respondents reported that their companies were operating, on average, at 79.2% of normal capacity. That operating capacity is 3.1 percentage points lower than the capacity reported in December.

Eight of 18 manufacturing sectors are expected to see revenue growth this year: primary metals; miscellaneous manufacturing; computer and electronic products; chemical products; electrical equipment, appliances and components; printing and related support activities; food, beverage and tobacco products; and transportation equipment.

Excerpted with edits; more at: https://www.manufacturingdive.com/news/ism-economic-forecast-tariffs-revenue-production/748452/

2. TARIFF EFFECTS AND CURRENT LEVELS

“The State of Tariffs – May 2025,” The Budget Lab (Yale University report), May 12, 2025

The Budget Lab (a Yale University center) estimated the effects all US tariffs and foreign retaliation implemented in 2025 through May 12, including the effects of the lower rates with China, the deal with the UK, and the recent announced auto tariff rebate. It analyzed the May 12 tariff rates as if they stayed in effect in perpetuity. [This does not reflect President Trump’s May 23 threats to increase EU tariffs to 50% and Apple iPhone tariffs to 25%.]

Current Tariff Rate: Consumers face an overall average effective tariff rate of 17.8%, the highest since 1934. The reduction since the April 15 report is almost entirely due to the lower rates on Chinese imports—the US-UK trade deal has minimal effects on average tariff rates. Even after consumption shifts, the average tariff rate will be 16.4%, the highest since 1937.

Overall Price Level & Distributional Effects: The price level from all 2025 tariffs rises by 1.7% in the short-run, the equivalent of an average per household consumer loss of $2,800 in 2024 dollars. Annual pre-substitution losses for households at the bottom of the income distribution are $1,300. The post-substitution price increase settles at 1.4%, a $2,300 loss per household.

Real GDP Effects: US real GDP growth is -0.7pp lower from all 2025 tariffs. In the long run, the US economy is persistently -0.4% smaller respectively, the equivalent of $110 billion annually in 2024$.

Labor Market Effects: The unemployment rate rises 0.4 percentage point by the end of 2025, and payroll employment is 456,000 lower.

Fiscal Effects: All tariffs to date in 2025 raise $2.7 trillion over 2026-35, with $394 billion in negative dynamic revenue effects. This is $300 billion more than under the higher 145% China tariffs, showing how far from revenue-optimal levels those rates were.

Excerpted with edits; more at: https://budgetlab.yale.edu/research/state-us-tariffs-may-12-2025

3. WHAT IS CHINA’S RESPONSE?

“China’s Plan to Fight Trump’s Trade War,” Isaac Chotiner - Interview with MIT Sloan School Professor Yasheng Huang, The New Yorker, April 17, 2025

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Q: What is China’s Xi Jinping’s perspective in dealing with US tariffs?

They don’t want a trade war. Their economy is struggling, and the export sector has been one of its few bright spots. Last year, they had almost a trillion-dollar trade surplus. The property sector is not doing well. The technology sector is doing well, but it’s not really adding that much to G.D.P. growth. So this was purely a trade war that was initiated by the United States, and not by China. I don’t think they want to cave in. That would make the Chinese leadership look very bad. And, moreover, I don’t think they trust the Trump Administration. Even if they were to give concessions this time around, I don’t think they believe that the concessions would hold. So there are multiple motivations on their part not to quickly come to an agreement if that agreement requires significant concessions.

Q: Does the tariff battle change China’s midterm policies?

In terms of the bigger-term picture, the thing that they have been really, really serious about is technology. Trade is important in terms of G.D.P. growth. But, from their point of view, the long-term issue with the United States is that the U.S. controls key technologies that China needs for its national security and for its economic growth. And since 2018—the first Trump trade war and tariffs—they have moved substantially toward technological self-sufficiency, and they have achieved quite a bit of success. But that movement toward technological self-sufficiency has also exposed them to trade shocks and to the volatilities of the external economy. So that’s the dilemma that they have. They are able to reduce technological dependency on the United States, but arguably they have not reduced the economic dependency on the external sector.

Q: Why would becoming more self-sufficient also open them up to trade shocks? When I say self-sufficiency, I mean technological self-sufficiency. Technologies are extremely costly, and they require significant up-front investments—and the returns happen in the future, if they happen at all. There is no evidence that the kind of technological investment China has made has created a real economic payoff. If you look at the G.D.P. data, it’s very clear that, as they have achieved technological successes, the G.D.P. growth rate has trended down rather than up. And the most direct measure of the economic implications of this significant up-front investment is that productivity is actually slowing down. In the short term, you need to generate G.D.P. growth, and you need to create employment.

And those aspects of the Chinese economy—productivity, G.D.P., employment—require a robust export performance, simply because the real-estate sector, which was almost thirty per cent of the Chinese economy, is struggling. Consumer sentiment is fairly low after the covid pandemic. Unemployment is problematic. The export sector is one sector that has been doing well. And now they are faced with this trade shock. But that doesn’t mean that they are going to cave in, because this discussion is really about politics, not about economics.

Q: What specifically are you talking about when you say technology? Electric vehicles, wind turbines, other energy-transition industries, and, more recently, A.I. If you look at those energy-transition sectors where China is clearly emerging as a leader, they have a major overcapacity, meaning that the domestic economy is not generating sufficient demand for the products that are being produced. Whenever you have a gap between supply and demand, that gap has to be absorbed somewhere else. So that’s why the European Union is very concerned about Chinese products coming their way. And the United States has always been concerned about Chinese exports coming to this country. And even other developing countries are concerned about Chinese products flooding into their regions. So, essentially, the technological successes that they have achieved have not been about creating demand but about creating supply. And when you have that gap between supply and demand, that forces the Chinese economy to depend even more on the external economy than it would otherwise.

(Asked at a May 7^th event about issues in the Trump administration’s tariff approach, Prof. Huang noted that it was entirely based on simple tariff levels not on sectoral strategies. He noted, first, that that East Asian economies do not impose tariffs on components and materials that their domestic manufacturing companies require; the current US tariffs have not considered this. Second, the term of current US tariff schedule is not fixed and is often subject to rapid change; industry wants the planning certainty of a tariff lock-in of at least five years. In addition, East Asian tariffs often require large foreign exporters to invest proportionately in the nation’s domestic economy; the Trump tariffs have no such requirement.)

Excerpted with edits; more at (paywall): https://www.newyorker.com/news/q-and-a/chinas-plan-to-fight-trumps-trade-war

4. FILLING MANUFACTURING JOBS

“Why Aren’t Americans Filling the Manufacturing Jobs We Already Have?” Greg Rosalsky, NPR Planet Money, May 13, 2025

According to data from the Bureau of Labor Statistics, there are nearly half a million open manufacturing jobs right now. Last year, the Manufacturing Institute, a nonprofit aimed at developing America's manufacturing workforce, and Deloitte, a consultancy firm, surveyed more than 200 manufacturing companies. More than 65% of the firms said recruiting and retaining workers was their No. 1 business challenge.

Tight Labor Market: Part of the story has been a tight labor market. There have been similar worker recruitment and retention issues in other sectors, like construction and transportation. But the shortfall of manufacturing workers is about more than just that — and with both major political parties pushing to reshore manufacturing, analysts expect the industry's workforce issues to get even more challenging.

The Biden administration invested over $2 trillion on initiatives aimed at reinvigorating American industry, in legislation like the Infrastructure Investment and Jobs Act, the CHIPS and Science Act and the Inflation Reduction Act. There has been an explosion of spending to construct new factories in America, and analysts had expected the demand for manufacturing workers to grow [although the Trump administration is in the process of repealing most of the energy-related manufacturing investments, which is the bulk of the funding].

The average manufacturing worker is also relatively old, and the industry expects a tidal wave of retirements in the coming decade. The Manufacturing Institute and Deloitte projected that the industry will need 3.8 million additional workers by 2033 and that as many as "1.9 million of these jobs could go unfilled if workforce challenges are not addressed." These estimates were calculated before Trump's recent tariffs, which, at least theoretically, are supposed to compel even more manufacturers to build factories in America.

Skill Requirements: But if manufacturing jobs are important, why aren't more Americans taking the ones we already have? Gordon Hanson is an economist at Harvard Kennedy School who has published influential research on American manufacturing, including on what happened to it in the face of competition with China. Hanson sees what you might call whiplash in an industry seeing a reversal of fortune. "A period in which there's been a substantial increase in manufacturing — it's a very recent phenomenon," Hanson says. " I think we can fill those jobs, but we're just not gonna fill 'em overnight."

One big reason manufacturers can't fill these jobs overnight is because they require workers to have particular skills. And it's not just skills needed to work on assembly lines. Only around 2 in 5 manufacturing jobs are directly involved in making stuff. Manufacturers also employ people to do research and development, engineering, design, finance, sales, marketing and so on.

Part of the political appeal of bringing manufacturing back is that, historically, they've provided good jobs and career ladders for people without a college education. However, many manufacturing jobs these days actually require college degrees. Carolyn Lee, the president and executive director of the Manufacturing Institute, says that roughly half of the open positions in manufacturing require at least a bachelor's degree. That said, the other half of open manufacturing jobs don't require a bachelor's degree. And manufacturers say they are also struggling to fill those. Lee says some of the most in-demand positions in manufacturing right now are maintenance technicians, machine operators, material handlers and forklift operators.

Higher Pay: A classic solution to apparent worker shortages: offer higher pay. That would probably convince workers to invest in acquiring coveted skills and enter the manufacturing workforce. This is one reason Oren Cass, the chief economist and founder of American Compass, a conservative think tank, says he's skeptical whenever employers complain about worker shortages. Manufacturers have, however, hiked their pay in recent years. That has helped cut the number of open manufacturing positions from their peak of over 1 million open positions in April 2022. (Like many other industries during the COVID-19 pandemic, manufacturers saw a wave of retirements, deaths and quits).

But the higher pay that Americans demand to work in manufacturing is one of the big reasons that many manufacturers left America in the first place. And so this wage issue raises the question of whether many manufacturers, particularly labor-intensive ones, can be profitable and globally competitive in the United States.

Productivity: Cass believes that tariffs can help even the playing field with foreign competitors. And he stresses that one of the keys to reshoring manufacturing — while maintaining well-paying manufacturing jobs — is higher productivity. " If somebody in the United States is 20 times as productive as somebody in China and you have to pay them 20 times as much, you are equally competitive," Cass says. So if American manufacturers can prove to be much more productive than foreign competitors — meaning American workers can make more in less time — they can pay the higher wages needed to attract and retain American workers while still remaining globally competitive. That, however, is a big if. American manufacturing has been seeing an alarming slowdown in productivity growth in recent years.

Image Issues: Lee agrees that manufacturers will be able to entice more people into the industry by offering higher pay. However, she says, the industry's issues with recruitment and retention go beyond dollars and cents. For one, she suggests, manufacturing has a PR problem. Many Americans have outdated notions of what manufacturing jobs actually entail. She suggests that many imagine they're the dirty, monotonous and dangerous factory jobs depicted in Charles Dickens novels. But, Lee says, they're actually "clean and bright and full of technology." She sees changing American perceptions about manufacturing as one crucial part of convincing more young people to work in the sector. More generally, if the industry is seen as vibrant and growing, as opposed to dying, that will probably help with recruitment.

Apprenticeships But even if the word gets out and more young Americans want to do these jobs, they'll still need the skills to be able to do them. "These jobs are in factories that are completely different from the factories of 25 years ago," Hanson says. "They require people to know how to use pretty sophisticated machinery." "The hardest skills to find are the ones that maintain and fix equipment," Lee says. "Every company we speak with is trying to hire technicians. Every single one. The challenge is that there is no one walking around on the street with these skills, and it takes one to two years to teach those skills and another one to two years to contextualize those skills to the specific plant environment."

: U.S. apprenticeships pale in comparison with the ones in countries like Germany and Switzerland. Third Way (a progressive think tank) found in 2022 only 0.3% of the American working-age population was in apprenticeship programs. For comparison, in Switzerland, that figure was 3.6%, or 12 times higher. Apprenticeships and other means to help Americans obtain vocational skills may be especially important for the high-tech manufacturing jobs we have today. Lee says today's manufacturing jobs often require some combination of "knowledge of electrical systems, mechanical systems, logic controllers, hydraulic power and robotics."

The Manufacturing Institute has been working to develop better apprenticeship programs to help Americans build the skills the manufacturing sector needs. " The very best models of workforce development that we see and that we engage in at the Manufacturing Institute are locally and regionally led public-private partnerships, where manufacturers come to the table and — with the support of the community college system and the local business community — they build the talent pipelines that they need," Lee says.

But what is clear is that bringing American manufacturing roaring back will likely require more than just slapping up tariffs or investing money to build new factories. Leaders may need to regear our education system to help more Americans acquire the skills that manufacturers need for a productive and capable workforce.

Excerpted with edits; source at: https://www.npr.org/sections/planet-money/2025/05/13/g-s1-66112/why-arent-americans-filling-the-manufacturing-jobs-we-already-have

5. GM ENTERS THE BATTERY COMPETITION

“GM’s New Battery Technology Could Be a Breakthrough for Affordable EVs,” John Voelcker, Wired, May 13, 2025

General Motors is bringing in potentially groundbreaking new battery tech that not only has 30 percent more energy density at the existing production cost for cells but also would circumvent China's stranglehold on intellectual property for EV batteries. The company claims this new type of battery pack could lower the cost of its electric SUVs so they're comparable to their gasoline counterparts.

The news came as GM has announced it will use lithium manganese-rich (LMR) battery cells in its largest electric vehicles, the full-size trucks and SUVs sold by Chevrolet, GMC, and Cadillac. They are to be produced by Ultium Cells, its joint-venture battery company with LG Energy Solutions. The first such cells will come from a pilot line in 2027, with full volume production in 2028 at a plant it hasn’t disclosed.

The new cells are in the prismatic format, versus Ultium’s current pouch cells, which use a nickel-cobalt-manganese-aluminum chemistry. Those cells, in large standardized modules, power GM’s entire current EV lineup, from the compact Chevrolet Equinox EV up to the GMC Hummer EV. The new prismatic cells appear even larger than Ultium’s pouch cells, though GM did not provide dimensions. They will be housed in modules that, overall, have 50 percent fewer parts than their predecessors. That may prevent delays like those that delayed volume production of its Ultium modules by 12 to 18 months, pushing deliveries of several models from late 2022 to early 2024.

Crucially, GM claims its Ultium battery engineers have created a chemistry that provides one-third greater energy density than comparable lithium iron-phosphate (LFP)—at a comparable cell cost. China owns virtually all the intellectual property around LFP chemistry, which costs less in materials than NMCA because it uses none of those metals. The trade-off for lower cost is lower energy density by volume. The earliest NMC cells used roughly equal thirds of nickel, manganese, and cobalt. GM’s current “high-nickel” Ultium cells swapped out much of that cobalt for nickel while adding aluminum. They use roughly 5 percent cobalt and 10 percent manganese, said GM battery engineer Andy Oury, with the rest being nickel and aluminum.

The LMR cells, however, substitute manganese—which is cheaper and more globally plentiful—for some of the pricier nickel and virtually all of the cobalt. They are, Oury said, 60 to 70 percent manganese, 30 to 40 percent nickel, and only up to 2 percent cobalt.

If LMR chemistry actually produces a cell that costs as little to make as LFP with greater energy density, that could be a game changer—including for North American competitiveness against China in the critical sphere of battery development and production. Specifically, LMR packs will lower the cost of some full-size EV truck and SUV models to bring their prices closer to those of their gasoline counterparts. That’s crucial to boosting sales of the full-size EV models, which have not reached the same volumes and market penetrations as those of GM’s compact and midsize EV crossovers.

GM has said little about its plans for cells using the third chemistry, lithium-iron phosphate. However, the upcoming 2026 Chevrolet Bolt EV—a reboot of the compact hatchback that was its first and only battery-electric model from 2017 through 2022—has long been expected to use LFP cells to keep its price close to the $30,000 level of earlier models. Expect more details within weeks or months.

Hiring Kurt Kelty as its VP for battery propulsion from Tesla, was a coup for GM, given his previous 11-year tenure as Tesla’s battery czar—and 15 years before that with Japanese cell maker Panasonic. He said he arrived at GM with “some preconceptions” about what directions the company should take for its cells going forward. He was, he said, initially resistant to the idea of using LMR cell chemistry, but GM’s battery engineers had worked on developing the chemistry since 2015—and persisted in their advocacy.

LMR is not yet an industry-standard term for the battery chemistry; following the formats of the other two, it should really be LMN, for lithium-manganese-nickel. Regardless of name, GM hopes to be the first to bring it to market in volume. Ford used the same term and beat GM to the punch on the PR front when Charles Poon, its global director of electrified propulsion engineering, published a LinkedIn post in late April.

That post said Ford had developed “a game-changing battery chemistry that will lead to enhanced safety, lower cost, and industry-leading energy density” it was working to integrate into Ford electric vehicles “within this decade.” GM’s LMR announcement, while later, specified he year 2028.

Excerpted with edits; more at: https://www.wired.com/story/gms-new-battery-tech-could-be-a-breakthrough-for-affordable-evs/

6. THE EXPORTS TO CHINA THAT WILL BE HARD HIT BY TRADE WARS

“20 Key Products China is Heavily Dependent on for Imports,” Adam Tooze, Chartbook, May 23, 2025

China still heavily depends on imports for many products, and there are still insurmountable technological challenges in research, development, and production in these areas. Below are industrial products – many but not all are supplied at least in part by US producers - that are crucial to China’s economy, as well as industrial components directly related to our daily life. Here’s a look at 20 products China is significantly reliant on from imports.

1. High-End CNC Machine Tools
   Machine tools are the foundation of modern manufacturing. Without them, modern production would be impossible. With the advancement of technology, the demand for precision in manufacturing continues to rise, making high-end CNC machine tools essential. Most of China’s high-performance machine tools are imported from Germany, the US, and Japan, with a domestic production rate of less than 10%. Despite growing investments in R&D for machine tools, the precision and durability of domestic machines fall short of global standards.

2. Chips

   From smartphones to the supercomputers used for lunar exploration, chips are ubiquitous. China’s chip market is worth hundreds of billions of dollars, but unfortunately, the domestic production rate of core integrated circuits is near zero, with a trade deficit of $165.7 billion. While China is intensifying efforts to advance chip technology, it remains in the middle to low-end segment globally, unable to produce high-end chips like logic and memory chips independently.

3. Lithography Machines

   Lithography machines, often called the "mother of chips," are a key reason behind China’s chip shortage. Currently, only Dutch ASML and Japanese companies Nikon and Canon can manufacture high-end lithography machines, with ASML holding an 87.4% global market share. Due to US sanctions, these advanced machines are not allowed to be exported to China. Overcoming this technological barrier will require significant innovation from within China itself.

4. Operating Systems

   Although China’s smartphone industry is leading globally, it is still dependent on foreign operating systems. Google’s Android holds an 81.5% market share, and Apple’s iOS controls 18.4%. China’s own operating system, HarmonyOS, has not gained significant traction and remains a minor player. To truly achieve independent smartphone production, China must address the gap in operating system development, which requires years of collaboration between chip, system, and software

5. Medical Equipment

   Medical devices are essential for diagnosis, monitoring, and treatment, directly impacting millions of patients. Despite improvements in China’s healthcare industry, many advanced medical devices are still imported from Germany, Japan, and Switzerland. These high-end precision instruments can cost millions of dollars, and the gap between domestic and global products remains significant.

6. Aerospace Engines

   China has made significant strides in space exploration and fighter jet development, yet it still relies heavily on imported aviation engines. Companies like Pratt & Whitney (USA), General Electric (USA), and Rolls-Royce (UK) dominate the global aerospace engine market, while China’s domestic engines account for less than 1% of the market. This dependency not only limits China’s civilian aviation growth but also impacts its air force’s capabilities, such as the J-20 fighter jet.

7. Automotive Engines

   Chinese car manufacturers still rely on foreign technology, often purchasing outdated technology that doesn’t meet the same standards as foreign joint ventures. Despite advancements in design and manufacturing, Chinese car engines are still lagging behind their foreign counterparts in terms of production process and reliability.

8. Marine Diesel Engines

   While China leads the world in shipbuilding technology, it still depends heavily on imports for marine diesel engines. More than 95% of the engines used in Chinese ships are diesel engines from foreign companies like MAN B&W and Wärtsilä, which have a near monopoly on the global market. Despite some efforts in domestic production, China faces challenges due to patent restrictions and the need for breakthroughs in technology.

9. High-End Sensors

   High-end sensors are critical for smart devices, from smartphones to smart homes. However, China still lacks high-precision sensors. While there has been progress, the domestic sensor market mainly consists of low-end products, with 80% of high-end sensors being imported.

10. Switch Machines

    Switch machines are essential for controlling railway points, ensuring safety and improving transportation efficiency. However, China’s domestically produced switch machines, like the ZD6, fall short of international standards in terms of precision, relying on imports to meet operational requirements.

11. High-End Bearings

    Bearings are crucial components in everything from bicycles to spacecraft. Yet, in high-precision machine tools, China is still lagging behind in bearing technology. Precision bearings required for high-speed CNC machines and machining centers, such as P4 or higher levels, remain mostly dependent on imports.

12. Mainframe Computers

    Mainframe computers are irreplaceable in certain industries, handling critical functions like banking transactions and user data. Despite their importance, China still heavily relies on imports for mainframes, with domestic products lagging behind in terms of security and reliability, especially compared to global giants like IBM.

13. Transmission Electron Microscopes

    Transmission electron microscopes (TEM) are vital for scientific research, capable of seeing structures smaller than 0.2 microns. China currently cannot produce high-precision TEMs, relying on imports from the US, Japan, and the Netherlands for research and university labs.

14. CNC Cutting Tools

    CNC cutting tools are essential for industrial production, but China’s domestic tools still fall behind foreign products in terms of precision and durability. This gap, combined with a lack of high-end machine tool technology, means China’s CNC tools are largely reliant on imports.

15. High-Precision Robotic Arms

    Industrial robots are crucial for automation, but China is still behind in producing high-precision robotic arms. Advanced robots, like those from KUKA, are capable of performing complex tasks with extreme precision, a standard China has yet to match in its own robotic production.

16. Gene Sequencing Machines

    Despite breakthroughs in gene editing, China still struggles with producing its own gene sequencing machines. Over 99% of these devices are imported from the US, and without access to these machines, China’s gene engineering efforts would be severely hindered.

17. Vacuum Deposition Machines

    The production of OLED screens, like those in Huawei phones, is highly dependent on vacuum deposition machines, a technology still monopolized by Canon Tokki in Japan. These machines are critical for OLED production and are almost impossible to obtain, even with sufficient funding.

18. Photosensitive Dry Film

    Photosensitive dry film is essential for manufacturing printed circuit boards (PCBs). However, China’s production of photosensitive dry film is limited, with most of the demand being met by imports, leaving the country reliant on foreign suppliers for this critical component.

19. Anti-Cancer Drugs

    The cost of imported anti-cancer drugs is a significant issue in China, where 95% of cancer medications are still imported. Although local pharmaceutical innovation is growing, it will take years of investment and development to reduce reliance on foreign drugs for cancer treatment.

20. Digital Cameras

    While China’s space program has advanced significantly, it still cannot produce a simple digital camera. The manufacturing process for high-end cameras, such as DSLRs, is highly complex, requiring advanced optical, electronic, and mechanical technologies that China’s manufacturing industry is yet to fully master.

Excerpted with edits; more at(paywall): https://adamtooze.substack.com/p/top-links-747-the-beef-price-shock

7. CHINA DOMINATING GREEN ENERGY TRANSITION

“How China's Powerslide is Driving the Global Green Electricity Transition,” Adam Tooze, Chartbook, May 19, 2025

In 2024, according to the IRENA data, new additions of renewables dwarfed fossil additions by a factor of almost twenty. Yes! You read that correctly. The disparity really is that large. The renewable share of new capacity additions in electricity generation worldwide is 90 percent. As far as new capacity is concerned, the transition to solar and wind is a more or less accomplished fact. (see chart below).

The huge surge in renewable capacity installation is real enough. But it is not global, in the sense of a common development proceeding at a roughly similar speed, or spreading like a wave around the world. Most of the world has seen no dramatic increase in the pace of renewable installation. The rate of expansion has generally been high, but it has not accelerated much and it is, overall, far from dramatic.The spectacular acceleration in global renewable investment is, in fact, a story about one country: China.

Data shows clearly, in the Rest of the World (ROW) ex-China there has also been a huge surge in, for example, solar investment since the late 2010s. But this is a spillover effect from China’s boom since the overwhelming majority of PV panels worldwide are sourced from

Excerpted with edits; more at: https://adamtooze.substack.com/p/chartbook-386-how-chinas-powerslide

7. TROUBLE IN US FACTORY AUTOMATION AND CONSTRUCTION

“Factory Fantasies: The Trouble with MAGA’s Manufacturing Dream,” The Economist, April 28, 2025

Where are the robots? Howard Lutnick, the commerce secretary, recently insisted that “the army of millions and millions of human beings screwing in little, little screws to make iPhones” would soon come back to America, where the work could be automated. Anyone expecting automation to solve the problem risks being disappointed. Yet a robotic overhaul of American manufacturing seems a long way off.

In 2023 there were just 295 industrial robots for every 10,000 manufacturing workers in the country, according to the International Federation of Robotics, an industry group. While that was up from 255 in 2020, it was dwarfed by China’s 470 and South Korea’s 1,012 (see chart 1). Contrary to Mr Lutnick’s claim, Apple is now said to be planning to assemble America-bound iPhones in India.

Want to build a new factory? According to a 2023 paper by Austan Goolsbee and Chad Syverson of the University of Chicago, productivity in the construction sector, measured as output per worker, has fallen by two-fifths from its peak in the 1960s (see chart below). The authors blame excessive regulation, NIMBYism and a lack of incentives to deliver projects on time, among other things. Labor shortages have also buffeted the sector lately.

America’s existing factories are also ageing. Over half of the roughly 50,000 manufacturing facilities across the country are more than three decades old; the average plant was built some 50 years ago. Much of the electricity grid was constructed in the 1960s and 70s and is at or near the end of its useful life, a factor behind increasingly frequent power cuts. Factories seeking a new connection to the grid face years of delay. Transport infrastructure linking to factories is no better; one in three bridges needs to be replaced or repaired.

So America not only has an automation and productivity problem, it is not going to be building new factories fast.

Excerpted with edits; more at: https://www.economist.com/business/2025/04/28/the-trouble-with-magas-manufacturing-dream

Since 2022, MIT has formed a vision for Manufacturing@MIT, a campus-wide manufacturing initiative directed by Professors Suzanne Berger, A. John Hart and Christopher Love that convenes industry, government, and non-profit stakeholders with the MIT community to accelerate the transformation of manufacturing for innovation, growth, equity, and sustainability.

MIT this month announced that Manufacturing@MIT will become the MIT Initiative for New Manufacturing (INM), to redefine what’s possible in manufacturing. Through research, hands-on training, and deep industry collaboration, INM aims to build the tools, systems, and talent to shape a more productive, sustainable, and resilient future.

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