China took the top spot as the largest manufacturing nation in the world in 2010, replacing the U.S., and continued to gain momentum in 2011, but China must make a long-term transition that will be possible only through economic and political reforms, according to a new MAPI report. "Eventually, growth will depend more heavily on an expanding service sector, where difficult structural changes are necessary to promote productivity growth. The Chinese will eventually exhaust the easy productivity gains from imported technology and technology transfer, and they will have to rely more on their own R&D," according to MAPI chief economist Daniel J. Meckstroth. "The growth rate in China is bound to slow –- what remains to be seen are the magnitude of change and the timing."
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