Global Manufacturing Is Careful About Protectionism

The new round of adjustment is in the process of layout. In the next 5 to 10 years, will the re industrialization of Europe and the United States bring about the re emergence of the manufacturing industry? Will the Chinese manufacturing industry lose a key seat? And can the Southeast Asian neighbours produce qualitative changes in the manufacturing chain? For this reason, this newspaper interviewed Zhang Yansheng, director of the Institute of foreign economics, national development and Reform Commission, director of the foreign research department of the Ministry of Commerce and Ma Yu, and Cao Jianhai, a researcher at the Institute of industrial economics of the Chinese Academy of social sciences.

Q: what changes do you think will happen to the global manufacturing industry in the next 5~10 years?

Zhang Yansheng: in the future, in the global manufacturing industry, the competition of high-end manufacturing industry will become more and more intense. Europe and the United States will move towards "manufacturing return"; China will develop from the low end manufacturing industry to the high end; Japan and South Korea will also strengthen the high-end manufacturing industry.

In the low and middle manufacturing industry, under pressure of cost, enterprises will shift to lower cost areas such as manpower, land and so on, for example, to the central and western part of China or to less expensive Southeast Asia.

Q: Europe and the US have been calling for the return of manufacturing industry to achieve "re industrialization". Can this goal be achieved? What areas will the "re industrialization" of Europe and the United States focus on?

Zhang Yansheng:

"This is a long-term goal of Europe and the United States. The financial crisis has proved that over reliance on virtual economy and real economic slump is impracticable. Now the European and American countries have realized this, so they call for the return of manufacturing industry.

In the future, Europe and the United States will rely on innovation to enhance the manufacturing industry by strengthening the high-end manufacturing industry, such as new information technology, aircraft manufacturing and new energy.

Some European and American countries have already introduced industrial planning in these fields. The key to success is to create a new mode of industrialization and seize the commanding heights of technology and mode.

Cao Jianhai: in the past few years, although the United States has implemented three rounds of monetary easing policy, but unlike China, the price level and labor price level of the United States are still in a very stable state, and even to a certain extent, the environment of the manufacturing industry in the United States is somewhat better than before.

Moreover, compared to Southeast Asia and other countries, the US market is more perfect, supporting facilities are perfect, and has greater advantages.

The US manufacturing industry is likely to rise again.

Ma Yu: the United States not only proposed to "re industrialization", but also the United States policy is very effective.

The United States can calculate the cost difference between manufacturing in the United States and in other countries, and then formulate corresponding policies to fill part of the gap through tax preferences.

At the beginning of this year, Boston consulting company surveyed 106 multinationals whose annual sales volume was no less than 1 billion US dollars, 37% of them considered moving part of the manufacturing business back to the United States, and quite a few of them were originally made in China.

The effect of US policy is evident.

Although the manufacturing sector in the United States may not be as large as the economy in the past, a small increase in manufacturing will help the economy a lot for the United States.

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Q: what will be the pattern of "made in China"? What are the main variables?

Cao Jianhai: the biggest feature of this round of manufacturing adjustment is fleeing mainland China.

China's manufacturing industry will face a huge impact, slowing down is inevitable, if serious, and even in some areas, there may be negative growth.

China's manufacturing factors, such as land and labor costs, have seen sharp increases or even doubled in the past few years of steady growth policies, and this rise is not seen in the fall. China's manufacturing cost advantage to European and American countries is largely lost.

In addition, China's manufacturing industry is mainly a substitute enterprise, and has not formed its own for many years.

With the impact of external shocks, the global position of Chinese manufacturing industry may be shaken.

Ma Yu: China will not play the role of developed countries or newly developed countries in international industrial pfer. It will act as a cascade of industrial pfer.

China's manufacturing industry still has great potential for development and carrying capacity unless we restrict ourselves.

At present, the relocation of manufacturing enterprises is relatively small for China.

With the pfer of some foreign invested manufacturing projects or orders, it is inevitable for some private enterprises to get into business difficulties.

However, the space of the Chinese market is relatively large. The current situation does not show that the strength of China's manufacturing industry is weakened or even lost. China's competitive advantage is long term: huge and high-quality labor resources, complete industrial chain, strong industrial foundation and huge domestic market.

China is a permanent manufacturing base in the world.

Zhang Yansheng: the main variable of China's manufacturing industry is cost. The rising cost leads to a decline in export competitiveness.

The future direction of development is the seven strategic emerging industries proposed by the state, as well as the modern service industry.

Cao Jianhai: some countries in Southeast Asia may be hot, but this needs a growth process. The overall supporting facilities in Southeast Asian countries are relatively poor, and the domestic market needs to be nurtured. Not all manufacturing industries will move to Southeast Asia.

Southeast Asian countries will occupy parts of China's manufacturing industry because of rising costs, RMB appreciation and other lost markets. But the healthy and rapid development of Southeast Asian economies depends on the policies of Southeast Asian countries, especially the real estate policy.

Southeast Asia needs lessons from the United States, Japan and China.

Ma Yu: Southeast Asian countries can not take the place of China. In addition to the low cost, Southeast Asian countries can not compete with China in other respects.

Now the pfer from China to Southeast Asian countries is basically labor intensive enterprises, and are not deep enough industry chain, after all, the industrial chain of Southeast Asia is not perfect.

Q: how will the change of manufacturing pattern affect the economy of different regions and what will be the impact on the global economy?

In fact, some people now question the realization of "re industrialization" in Europe and America. At present, many methods are realized through trade protection. This is also a new challenge in the world.

The United States appeals for capital withdrawal to the mainland and emphasizes the importance of industrial salvation. This situation seems more like regionalization rather than globalization, resulting in great pressure on trade conflicts and regionalization conflicts.

The most important manifestation of the United States' regionalization and not globalization is that the United States joined the Pan Pacific Strategic Economic Partnership Agreement (TPP) in 2008. This agreement is mainly aimed at the Asia Pacific countries. After the US accession, Australia, Peru, Vietnam, Malaysia and other countries have joined in, and Japan is negotiating.

As for China, how to deal with this challenge, I think we must stick to globalization, persist in reform and opening up, oppose trade protectionism, and concretely refer to the implementation of the framework agreement on Cross Straits Economic Cooperation (EC-FA), the completion of the China Japan Korea free trade area, the integration of the economic system with international standards, and the further development of reform and opening up with this round of global economic change.