THE OUTLOOK: "China's Gains in Manufacturing Stir Friction Across the Pacific," by Timothy Aeppel, Wall Street Journal, 3 August 2009.

Of course we know that China manufactures everything in the world, and the United States virtually nothing anymore.

Except the U.S. is still #1 by size (20% of world total). Still, China will surpass sooner than most experts had previously expected (12% in last year measured--2007, it should surpass us around 2015).

Now for the true non-hype:

U.S. manufacturing is shrinking, shedding jobs and, in the wake of this deep recession, producing and exporting far fewer goods, while China's factories keep expanding.

Thus continued concerns on the trade imbalance.

Still . . .

Many economists argue that the shrinking of U.S. manufacturing--both in terms of jobs and share of gross domestic product--is a normal economic evolution that started long before China emerged as a manufacturing powerhouse.

Unless we want to keep America from moving up the value chain, we will have less manufacturing.

True enough, especially since China consolidated a lot of lower-end manufacturing from a lot of neighboring Asian states, becoming the final assembler of note.

The opposing school of thought says we must retain our industrial base or lose our fundamentals--as it were.

But here's the trick with the manufacturing lobby: many produce in China as well as the U.S.