Unemployment Rate Has Been Above 8% For A Long Time, And 20% Orders Of American Manufacturing Industry Return To China

The U.S. economy, built on finance, service industry and consumption, has been in a long-term downturn since 2008. The unemployment rate has been above 8% for a long time, and even exceeded 10% during this period. With the upcoming general election, the political parties are under great pressure, and the national policy of the United States is changing, so it is inevitable to revitalize the manufacturing industry.

Many Americans discovered overnight that goods made in China are no longer cheap! The American manufacturing industry, which once developed by taking advantage of the cheap labor force and exchange rate of developing countries, suddenly found that the former competitive advantage was fading, and returning to the United States quietly became a force. Can this return solve the problem of US economic growth? Will it pose a threat to China, the factory of the world? Will the backflow continue for a long time? On site visits were carried out in New York, the United States.

ANK is a large Chinese investment company in the United States Textile manufacturing Company. Yang Guoliang (a pseudonym), the head of the company, said that 90% of the company's products were made in mainland China before, but now at least 20% of the orders are returned to the United States. Another large Chinese investment enterprise, Xiehe Doors and Windows, currently has the largest output in New York. Seven or eight years ago, this company wanted to return to mainland China for development.

　 Chinese enterprises also place parts processing and manufacturing in the United States

According to Yang Guoliang, in the past two years, the overseas production orders of many American manufacturing enterprises have declined by 20% - 30%, while the domestic production orders have increased by 20% - 30%. He said that in the North Carolina region of the United States, about 90% of the garment manufacturing industry has returned to the mainland.

Yang Guoliang predicted that more and more order production would stay in the United States, including automobile, furniture clothing And high-tech industries, while the food processing industry is difficult to move production overseas due to the large demand. Even many Chinese enterprises have begun to place the processing and manufacturing of spare parts directly in the United States in order to obtain tax relief.

Dr. Zhang Anyuan, director of the Financial Research Office of the Economic Research Institute of the National Development and Reform Commission, said yesterday that from the general trend, the unemployment rate in the United States is above 8%, and the manufacturing industry must be revitalized. On the other hand, as the financial crisis continues, the United States can no longer rely on the financial industry and service industry to support its economy, especially the limited labor force that can be absorbed by the financial industry and service industry.

Does the return of American manufacturing industry increase local employment opportunities and promote wage growth?

The monthly salary of ordinary service staff in Downtown New York increased by $200

At the 8000 Employment Agency on Allen Street in Lower New York City, the boss, Miss Huang, told reporters that she felt that the number of people looking for work recently had not changed significantly compared with that before 2008.

Later, I came to the Star Employment Agency located in Eldridge Street, and heard a noisy voice from a long distance. It turned out that yesterday's applicant, Mr. Wang, continued to look for work today. Miss Lin, a staff member, told the reporter that the salary of ordinary service staff has recently increased by about $200 per month. Although the salary has increased, there has been no obvious change in the people who come here to look for jobs. As for the pressure of rising prices, Ms. Lin said that the basic living consumption only increased slightly compared with three or four years ago.

Viewpoint: It is still cost-effective for American enterprises to build factories in China

According to an insider who did not want to be named, a large American automobile enterprise did not consider moving its production capacity back to the United States. "This is unrealistic." The above people said, first of all, China is the world's largest car market, and it is still booming. In addition, China's industrial policy stipulates that foreign car companies must establish joint ventures with their Chinese counterparts to manufacture cars in China. If they withdraw, it will involve a series of negotiations. Finally, from the perspective of workers' compensation, the cost of automobile manufacturing in the United States is also higher than that in China.

The once evacuated auto companies are also returning to China. After the financial crisis in 2008, Chrysler Motor Corporation of the United States moved its management headquarters in China back to the headquarters of Auburn Hills in the United States. However, with the introduction of its Italian counterpart Fiat, this old car company began to covet the opportunity of manufacturing in China.

According to data, as early as the end of 2004, the US authorities issued the US Domestic Investment Act, hoping to encourage overseas profits to return to the US through tax reduction measures. However, the investment of American automobile enterprises in China has increased. At present, GM has 11 joint ventures and 2 wholly-owned subsidiaries in China, with more than 35000 employees. Ford also has more than 26000 employees in China.

American investment bank expert Rafer Snyder told reporters that the American manufacturing industry has built factories in China for many years and the cost is relatively low, so it is not cost-effective to move back to China. The Obama administration's manufacturing recovery plan does not provide much incentive to those enterprises that have set up factories overseas. These American enterprises may move their factories from China to other regions with lower costs, such as Southeast Asia.

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Factory owner: Whether the backflow will continue remains to be seen

Riversneider said that at present, China's manufacturing industry still has a competitive advantage, and it is worthwhile for the United States to build factories in China. Even if the United States pays attention to manufacturing again, it will never return to the labor-intensive and low value-added traditional manufacturing industry. Moreover, the revival of manufacturing industry and the return of jobs is a cyclical process, which requires the government to introduce more supporting long-term policies.

However, it is not easy to make your own. Yang Guoliang believes that there are still many factors hindering the return of American manufacturing. First of all, the U.S. economy is in recession, and demand is still too weak. Small orders can be returned to China. Once there are large orders in economic recovery, local production cannot keep up. Secondly, the United States has long been far away from traditional manufacturing, and supporting factories have gradually disappeared.

Most importantly, the labor cost of the United States is still much higher than that of China. For example, skilled workers in the automobile industry are 20 to 30 dollars per hour, and the clothing industry is 10 dollars per hour. Even so, the new generation of immigrants in the United States are unwilling to engage in such low income hard work.

Some Chinese factory owners in New York believe that whether the return can be sustained in the long run remains to be seen.

Direct attack 1: The US government has significantly reduced taxes to encourage repatriation

The data released by the Labor Department on July 12 showed that the number of Americans applying for unemployment benefits for the first time fell sharply last week, significantly lower than expected, and hit the lowest level since March 2008. In the recent year, the US unemployment rate dropped from 9.1% in July 2011 to 8.2% in June this year. Because of the economic recession in the United States, the government hopes to stay in the manufacturing industry and increase employment opportunities, which has also become a competitive chip in the American election, meaning that whoever creates employment opportunities may become the next president.

In a Starbucks store in New York, the reporter saw a leaflet promoting the plan of "Americans create jobs for Americans". The small blackboard in the store also said "Let's increase jobs for America". Starbucks launched the "Create Jobs for America" action, which directly raised more than $11 million (up to $80 million if leverage is included). It created more than 4000 jobs in 44 states by way of loans. Google, Citibank, etc. joined the action.

Other enterprises, such as GLOBALFONDRIES, have established an advanced silicon chip factory worth 4.2 billion dollars in Malta, New York, which has received 1.3 billion dollars in cash subsidies from the New York state government and preferential tax relief policies for the next 15 years; Nissan obtained a loan of $1.45 billion for the high-tech vehicle manufacturing project supported by the US Department of Energy, which is part of the US Department of Energy's investment of $1.8 billion in Tennessee to support the establishment of a new factory.

　 Direct hit 2: $0.99 chain stores become $1.29

The reporter saw on the streets of New York that there were many chain stores in the urban area for $0.99 before, but now they have become $1.29 stores, which still contain small goods made in China, but according to this calculation, the price has risen by 20%. Behind the price rise is the high labor cost and transportation cost of overseas manufacturing, which is also American manufacturing An important reason for backflow.

Take the labor cost of the clothing industry as an example. Now, China's domestic wage growth has exceeded the productivity growth. The average wage of Chinese garment workers is about $1 to $2 per hour. Although it is much lower than the US garment workers' wage of $10 per hour, the wage growth of Chinese workers is accelerating and the gap is narrowing.

Because of the rise in oil prices, the sea freight price doubled in the past year. In addition, the overseas transportation cycle is long, which is particularly bad for the fashion industry that pursues popularity. Yang Guoliang said that it usually takes two to three months for Asian factories to arrive. At this time, the original popular fashion styles have become outdated.

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China's labor force growth rate is lower than wage growth rate

Zhang Anyuan said that China's labor costs are rising rapidly, the wages of ordinary workers have doubled over the years, and the number of employable workers has decreased. For example, at the end of the second quarter of this year, the number of rural migrant workers was 166.67 million, up 2.6% year on year, which was less than the wage growth of more than 14%, which has hit the willingness of American enterprises to invest in China. Moreover, a new round of improvement in industrial automation technology in Europe and the United States has partially offset the labor cost advantage of developing countries such as China. In addition, China's investment in the United States is also taking shape, which has to some extent reversed the outflow trend of the United States manufacturing industry. These investments in the United States have all promised to continue to employ local workers in the United States.

Expert: RMB appreciation accelerates the return of foreign enterprises

The exchange rate is another driving force. Zhang Anyuan pointed out that in recent years, the appreciation rate of the RMB against the US dollar has been close to 30%, which has greatly increased the cost of capital for American enterprises to set up factories in China. If the trend of RMB appreciation remains unchanged, it will also greatly affect the willingness of American enterprises to set up factories in China.

Riverside quoted the migration of Japanese manufacturing industry to compare. In terms of exchange rate, in 1971, the U.S. dollar against the Japanese yen was 1:360, compared with about 1:200 in previous years, and now it is about 1:76. The constant appreciation of the yen also reflects the continuous upgrading of Japan's manufacturing industry. In the past, the impression of the United States on Japanese products was mainly low-end cheap. Now, Japan's manufacturing industry has successfully upgraded and transformed, and the cost of production in Japan is getting higher and higher, As a result, enterprises have set up factories in the United States (such as automobile manufacturing). China may also have similar experience in the future. With the disappearance of China's demographic dividend and the continuous appreciation of the RMB, Made in China will also pursue high value-added goods.