To the people who care about such news, the report this week that China may soon displace the U.S. as the world’s largest manufacturing nation must have been a little less than surprising. Domestic manufacturers, and those who value their contribution to prosperity, understand that the global trends have favored China’s manufacturing sector — and for that matter, India’s, Brazil’s, or any reasonably large country that can control the factors (like raw material and energy costs and availability; environmental regulations; labor costs) that define manufacturers’ performance, as well as the mechanisms (e.g. currency rates; investment incentives; trade policies) that help to support the manufacturers’ competitive standing in the global market.

Chinese economic policies over the past two decades have been consistently focused on strengthening that nation’s manufacturing sector. The best that might be said about U.S. economic policies over the same period is that they have not supported domestic manufacturers in a similar fashion. There are more pointed criticisms to be made, to be sure.

But, a report from IHS Global Insight this week argues that it was the 2008-2009 recession that tipped the manufacturing advantage to China:

“The U.S. Bureau of Economic Analysis (BEA) in May 2010 reported the Manufacturing sector portion of U.S. GDP in 2009 was US$ 1.57 trillion, which represents a 6% decline from 2008, and an 8.2% decline from the previous high (US$ 1.71 trillion) in 2007. 

The decline in U.S. manufacturing over 2008-2009 was primarily attributable to the historically severe recession suffered by the whole economy. However a turn around in U.S. manufacturing output by now has already begun, starting in late 2009 and continuing through the early months of 2010, so the recessionary trends of 2008-09 for the U.S. manufacturing sector should not be extrapolated into the future.”

Even more, IHS finds that “forecasts for relative growth in the U.S. and China manufacturing sectors show that the "real" inflation adjusted size of China's manufacturing sector will not reach the size of the U.S. manufacturing sector until sometime around 2013-2014.”

Even though manufacturing’s well-informed advocates cite long trends, IHS is pointing to a highly dynamic process by which China’s manufacturing segment is peaking, and the U.S. manufacturing sector is rebounding. None of this credits recent and/or past mismanagement of the domestic economy, but it should be a reminder of manufacturers’ own potential to grow.