In the online discourse, the fading of American manufacturing and the rise of Chinese manufacturing, along with the underlying reasons, has been a perennial topic.
Recently, the narrative that attributes the decline of American manufacturing to the dollar's hegemonic status has gained traction again. At the same time, a book titled &#34;Apple in China&#34; has become a bestseller globally, crediting the rise of Chinese manufacturing, particularly in the high-end electronics sector, to the supply chain and talent development that Apple has built for China.
Let's discuss these two topics separately.
The decline of American manufacturing cannot be blamed on the dollar's reserve status.
Many people believe that since the dollar is the global reserve currency, countries around the world hoard dollars and buy U.S. Treasury bonds, leading to a continuous influx of capital into the U.S., which keeps the dollar's exchange rate high. When the dollar is strong, American-made goods become less competitive abroad, while cheaper foreign products find it easier to penetrate the U.S. market, resulting in a trade deficit and the decline of manufacturing in the U.S.
Recently, the central bank governor Pan Gongsheng mentioned this viewpoint, but he also emphasized that this influence is only &#34;to a certain extent&#34; and is not the main reason.
So who proposed this viewpoint? Mainly two individuals: one is Michael Pettis, who once taught at Peking University's Guanghua School of Management; the other is Stephen Miran, who is currently a governor at the Federal Reserve. Both believe that the dollar's reserve status is the primary reason for the decline of American manufacturing.
However, I want to tell everyone that neither of these individuals is seriously engaged in academic research; they are both involved in policy advising.
In the American academic community, true experts do not agree with their views. Academic heavyweights, such as Rogoff, the author of &#34;This Time is Different,&#34; have made it clear that the dollar's reserve status only has a slight adverse effect on manufacturing and is by no means the main reason for its decline, let alone the sole reason.
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Nobel laureate Paul Krugman has repeatedly pointed out that the share of manufacturing employment in the U.S. has fallen from about 24% in the 1970s to around 8% today, primarily due to productivity growth (technological advancements and automation have reduced manufacturing jobs while increasing output), rather than trade deficits or globalization. He calculates that even if all trade deficits were eliminated, it would only explain a small portion of the decline in manufacturing GDP share (about 2-4 percentage points). The reserve currency status may allow for sustained deficits, but it is not the main cause of the long-term deindustrialization of manufacturing.
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So what is the core reason that has led American manufacturing to decline step by step? In fact, it is entirely due to the choices and policies made by the U.S., which have little to do with the dollar's reserve status.
The first main reason is that the U.S. has actively abandoned mid- to low-end manufacturing, focusing all its efforts on finance and high-end industries
After World War II, American manufacturing once dominated the globe, but later American capitalists discovered that manufacturing was too tough; they had to build factories, hire workers, and manage production, with profits coming slowly while bearing cost pressures. In contrast, the finance, Wall Street, and technology sectors made money quickly and easily harvested wealth.
Therefore, starting in the 1970s and 1980s, capital in the U.S. flowed massively from manufacturing to finance, real estate, and high-tech fields. Companies moved factories to Southeast Asia and China, where labor was cheaper, leading to a gradual hollowing out of domestic manufacturing. This was a proactive economic choice by the U.S., not a result of the dollar's pressure.
The second main reason is that U.S. industrial policy and union issues held back progress.
On one hand, the U.S. has long lacked strong policies to support domestic manufacturing, instead loosening financial regulations and allowing industries to relocate. Government subsidies and infrastructure support for manufacturing are far from sufficient. On the other hand, U.S. unions are powerful, with workers demanding higher wages and benefits, keeping labor costs high. Domestic factories simply cannot compete with countries with lower labor costs, forcing companies to relocate. Over time, this led to a breakdown of the domestic manufacturing supply chain.
The third main reason is the inevitable result of globalized division of labor.
In the era of globalization, countries around the world have their roles. Developing countries have cheap labor and land, suitable for mid- to low-end manufacturing. The U.S. could have maintained high-end and precision manufacturing, but it gradually shifted even parts of high-end manufacturing, retaining only research and design while outsourcing production. Over time, skilled workers in domestic manufacturing left, and the supporting supply chain disappeared, leading to the collapse of the manufacturing base. This is a choice of global industrial division of labor, unrelated to the dollar's reserve status.
Let's think in reverse: if the dollar's reserve status were the main reason for the decline of manufacturing, then when the dollar's hegemony was at its peak in the early 1970s, American manufacturing should have been at its worst. However, the fact is that American manufacturing was globally leading at that time, and it was only after the U.S. proactively transformed that manufacturing gradually declined.
Furthermore, if the dollar's reserve status were the main reason for the decline of manufacturing, then countries like Germany and Japan, which have the euro and yen with certain reserve attributes, should also be overvalued. Yet German manufacturing has always been at the top in Europe, and Japan's high-end manufacturing remains among the world's leaders, which makes this argument completely untenable.
From another perspective, if the dollar's reserve status leading to its overvaluation were the main reason for the decline of manufacturing, then the U.S. service industry should also relatively decline. But in fact, the U.S. service industry has seen its service surplus grow significantly, making substantial profits!
The U.S. service industry, especially high-end services like finance, consulting, law, intellectual property, aviation, and education, has expanded into global markets without hindrance, relying on the dollar's hegemony and its status as a global reserve currency. Financial services from Wall Street, U.S. patent licensing, and legal services can all leverage the dollar's universality to sell easily worldwide, earning high profits.
Even if the dollar's exchange rate is high, the U.S. high-end service industry relies on technology, monopolistic advantages, and brand influence, not on winning through price. Therefore, it is completely unaffected by the so-called &#34;currency overvaluation,&#34; consistently earning large profits from the service industry, with service surpluses being an important support for the U.S. economy
This is enough to prove that the dollar's reserve status is absolutely not the main reason for the decline of American manufacturing. If it were truly to blame, the service industry should also be affected, but the reality is quite the opposite.
In summary, the dollar's reserve status has never been the &#34;nemesis&#34; of manufacturing. The decline of American manufacturing, after all, is a path chosen by itself: prioritizing finance over industry, relocating industries, policy gaps, and high labor costs—these are the root causes.
The dollar's reserve status is by no means the main straw that broke the back of American manufacturing. In the future, if anyone claims that the dollar's status has caused the decline of manufacturing, just forward this video to them.
China and Apple win together, mutually achieving a dominant position.
In the past, products made in China were synonymous with low quality and cheapness. How is it that now so many high-tech products are making other countries look for their teeth on the ground?
For example, recently, Zhang Xue 820 left behind established European and Japanese companies by 4 seconds on the motorcycle track. How did China become the global manufacturing powerhouse?
The book &#34;Apple in China,&#34; published in 2025, provides a conclusion that surprises both China and the U.S.: China's current strong manufacturing industry, especially in high-end electronics, is largely &#34;taught&#34; by Apple.
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This conclusion has made the book a global bestseller because, in the past, people thought that Apple came to China just to find cheap labor for phone assembly.
Now everyone knows that Apple came to China not to &#34;use&#34; technology, but to &#34;build&#34; technology. From how to set up production lines to how to control yield rates, Apple taught Chinese suppliers a complete set of world-class manufacturing technologies and process management experiences without reservation.
The most attractive part of this book is that it clearly explains Apple's turnaround from &#34;almost bankrupt&#34; to &#34;the world's most valuable company,&#34; as well as the story of its &#34;deep binding&#34; with the Chinese supply chain.
During the Jobs era, Apple wanted to manufacture computers in the U.S. itself, but the costs were high and efficiency was low, almost leading to its demise. After Cook took over, the company completely transformed: it outsourced all production, first trying other places in Asia, and finally locking in on China.
Why? China has a vast amount of cheap and hardworking labor, government-supported industrial parks, and suppliers that can quickly scale up production (like Foxconn). Apple not only placed orders but also invested heavily and taught hands-on: sending engineers to live in factories, teaching micron-level precision, optimizing assembly lines, and even directly investing in equipment.
The data in the book is shocking—Apple spent $55 billion in China in 2015, with a total investment of $275 billion from 2016 to 2021, training over 28 million workers, more than the workforce in California! However, it is worth mentioning that many people, including Apple itself, pointed out that the data cited by the author is either not rigorous or incorrect
What is the result? The iPhone sells hundreds of millions of units a year, and Apple has the highest market value in the world. According to the author, Apple is like Prometheus, bringing the &#34;fire&#34; of modern high-end manufacturing to China. It has transformed China from a place that could only produce cheap and low-quality goods into the world's most advanced and efficient manufacturing center.
However, the story told in the next part of the book takes a turn. The author believes that while Apple took off thanks to China, it also tied itself down—90% of its products are assembled in China, and if Beijing tightens the screws (tariffs, visa restrictions, policy requirements), Apple would be immobilized.
To maintain its supply chain, Cook has cooperated with the Chinese market in various ways: handling sensitive topics discreetly, complying with local regulations, and even nurturing &#34;local suppliers.&#34;
More harshly, the author believes that Apple inadvertently provided China with a &#34;high-end manufacturing lesson&#34;—technology transfer and knowledge diffusion directly boosted &#34;Made in China 2025.&#34; The author's conclusion is that Apple helped China become a technological powerhouse, but in doing so, it became &#34;geopolitical hostages,&#34; meaning Apple dug a pit and buried itself in it.
I completely disagree with the author's conclusion. The author seems overly Western-centric, attributing the rise and dominance of China's manufacturing industry solely to Apple, which overestimates Apple's strength.
In the author's view, &#34;Without Apple, China would not be the China of today.&#34; But in my opinion, &#34;Without China, there would be no Apple today.&#34;
The rise of China's manufacturing industry is the result of multiple factors, including China's own policies, a vast market, and a complete industrial system; we cannot attribute all the credit to Apple.
Moreover, it is the nature of capitalist enterprises to pursue profits, and any supply chain is subject to pandemic and geopolitical risks. Simplifying the relationship between Apple and China to &#34;one side is the victim, and the other is the predator&#34; is too reductive! The reality is that Apple and China have mutually achieved success and upgraded together: Apple made money and sold products, while China gained technology, built industries, and enriched its people. Like a marriage, mutual achievement is far better than mutual suspicion.
Let's first discuss what Apple has achieved for China.
Without Apple, China's electronic manufacturing industry might still be stuck in low-end assembly. Apple's stringent requirements, massive investments, and hands-on training from engineers have directly upgraded Chinese suppliers from &#34;basic processing factories&#34; to world-class precision manufacturing experts. Foxconn and others learned about scaling, quality control, and supply chain management. These skills later benefited Huawei, Xiaomi, and even the new energy vehicle supply chain. Chinese workers and engineers changed jobs or started their own businesses, taking knowledge with them, creating millions of jobs, and transforming China from the &#34;world's factory&#34; to a &#34;technological manufacturing powerhouse.&#34;
Conversely, what has China achieved for Apple?
Without China, where would Apple be today? Relying solely on the U.S. or India, Vietnam would lead to high costs, slow speeds, and an inability to scale. Apple achieved the miracle of &#34;hundreds of millions of units a year&#34; in profits thanks to China, with its market value soaring and innovation funding flowing continuously. The iPhone sells globally, with the Chinese market contributing significantly to its sales.
The book often describes Apple as &#34;fragile,&#34; but this fragility is mutual—China also cannot do without Apple as a super client; without the supply chain, worker employment, supplier profits, and local GDP would all be affected
In recent years of the trade war, Apple has indeed had headaches, but it has also partially shifted to India, and China hasn't &#34;choked&#34; it because cooperation is too important for both sides.
If I were to write this book, I would emphasize that globalization is inherently about you being in me and me being in you. Apple and China are not about one capturing the other, but rather about mutually elevating each other to the pedestal! Apple helps China soar, and China helps Apple become wealthy, making both sides stronger. This is the most remarkable aspect of globalization! Of course, there are risks, but cooperation, dialogue, and mutual progress are the true principles

The decline of American manufacturing and the rise of Chinese manufacturing is an ongoing topic. Recently, some opinions attribute the decline of American manufacturing to the hegemonic status of the dollar, but central bank governor Pan Gongsheng pointed out that this is only part of the reason. Academic experts like Rogoff and Krugman believe that the decline in manufacturing is mainly due to improvements in productivity, rather than trade deficits or the status of the dollar. The real reasons for the decline of American manufacturing lie in its own choices and policies

Xia Chun: The Fading of American Manufacturing and the Rise of Chinese Manufacturing