One worry for investors is that China will go the same way as Japan. Like Japan once did, China is playing a game of rapid catch-up with the U.S., with growth in output driven by high levels of investment and exports. As also happened in Japan, that growth model has led to the buildup of stress points in the domestic economy: a bubble in the real-estate sector and bad loans in the banks.

A new study shows how the decisions made today by goods producers and policymakers will shape U.S. competitiveness tomorrow.A debate over the future of U.S. manufacturing is intensifying. Optimists point to the relatively cheap dollar and the shrinking wage gap between China and the U.S. as reasons the manufacturing sector could come back to life, boosting U.S. competitiveness and reviving the fortunes of the American middle class. Whenever production statistics in the U.S. surge, it seems to bolster that hope; as New York Times columnist and Nobel laureate Paul Krugman put it in May 2011, “Manufacturing is one of the bright spots of a generally disappointing recovery.”