Manufacturing: the strongest focus of competition between China and the us
The competitive dynamics between China and the us will change dramatically, even fundamentally, after Mr Trump is elected President. Most people think that the focus of competition between the two countries in trade protection, globalization, exchange rate, international investment, etc., but, I don‘t think all aspects of the above is the strongest focus of competition between the two countries, while manufacturing is the strongest two competitive power of the focus.
Great power competition is a contest of economic power
The fundamental basis and core logic of the strongest focus judgment is that the competition between great powers is essentially a contest of economic strength, which is the basis of competition in other aspects. And manufacturing is the main body and key element of economic power. Trump to the merchant‘s smart to rebuild the U.S. manufacturing highly focused, on the one hand, increase the manufacturing industry in our country faces the threat from the U.S. manufacturing, on the other hand, manufacturing strength contrast change will change the overall competition between the two countries.
Trump in order to solve the problem of domestic manufacturing of hollowing out and a lot of labor, unemployment for big tax cuts and deregulation of the U.S. economy, in order to promote manufacturing reflux and revitalizing American manufacturing. Many scholars argue that the practice is not feasible, because labor costs and production costs in the United States are high, and manufacturing will face higher costs than abroad. There are also scholars who analyzed Reagan‘s neoliberal economic policies that pushed for tax cuts and deregulation, but the American manufacturing industry began to drain from this period. For Ronald Reagan, the analysis of the practice, we need to understand two things: one is the new liberalism and economic policies of the Reagan economic glory for decades after the United States laid the foundation, the second is the cost of manufacturing in China and the United States contrast has been changed.
China‘s real wage growth has averaged more than 10% a year since 1997, while the average increase in real labor productivity has averaged only about 2.5%, and even in recent years there have been signs of a halt to growth. Of American manufacturing, however, the actual Labour productivity growth is very significant, and the wages of labor growth stagnation or decline, this makes the United States through production efficiency to overcome the ability of the production cost and space. In addition, China‘s dependence on oil and gas imports has been increasing year by year, while the us has seen a shale gas revolution that has made it the world‘s largest energy producer. The shale gas revolution has made shale-gas-dominated us energy prices much lower than conventional oil and gas prices in the international market, and the us can significantly reduce its energy costs. The different changes in production efficiency and production costs between China and the United States have severely eroded China‘s previous cost advantage in manufacturing compared to that of the United States.
The us manufacturing recovery plan is highly feasible
China‘s cost advantage relative to the United States is virtually non-existent, according to a Boston consulting firm‘s estimates of the overall cost of manufacturing in 25 exporting economies. The company estimates the comprehensive manufacturing cost including the hourly wages of workers, labor productivity, energy costs, exchange rate four factors, the calculation results show that the comprehensive index of the cost of the average manufacturing in the United States is 100, our country manufacturing composite average cost index has been rising fast in 2014 to 96, compared with the United States only 4 points. Moreover, China‘s advantages are only reflected in labor costs. To take into account the rapidly rising labor wages in China, the price of industrial land and property prices also rose faster and enterprise tax burden, manufacture cost advantages relative to the United States in China is likely to continue to weaken. In the current cost comparison between China and the United States, trump‘s manufacturing backflow and revitalization plan are highly feasible.
Before Mr Trump came to power, the us government had begun to push back manufacturing, and the trump administration would dramatically accelerate that process. The 2008 financial crisis hit the rich world badly, but it also forced the governments of developed countries to refocus on manufacturing. The Obama administration has clearly put forward "manufacturing back to America", and has obtained the certain result, there is an obvious return and recovery of the U.S. manufacturing, equipment manufacturing industry of rebound even than Germany. And America‘s resurgent manufacturing sector is a high-end industry. America‘s high-end industries need to be met by two criteria: one is that each industry worker should spend more than $450, or 20% in the industry. Second, the number of STEM (science, technology, engineering and mathematics) degrees in the industry must be higher than the national average, or 21 per cent of the industry. Industries that meet these two criteria are among the most active and sustainable-growth industries. The reflux, recovery and revitalization of high-end industries in the United States will bring serious threats and challenges to our country‘s transformation and upgrading of manufacturing industry.
China and the United States are committed to developing and revitalizing manufacturing industries
While revitalizing the manufacturing industry in the United States, our country is also vigorously advancing and implementing the strategy of manufacturing power. The most direct strategy is "made in China 2025", proposed the concrete development and revitalization of manufacturing strategy, measures, methods, content such as industry, steps and stages, target, and then raises the supply side structural reforms in our country, and development and the revitalization of manufacturing major reform measures is closely related. The scientific degree, degree and effectiveness of these strategies and policies will determine the degree of revitalization of China‘s manufacturing industry.
After Mr Trump came to power, America‘s policies have increased dramatically, mainly as follows: first, to reduce corporate income tax from 39% to below 15%. Accelerating depreciation of fixed assets; Allow companies to bring back profits from overseas and pay a one-time tax at 10%. The second is to eliminate the large number of regulations that increase the burden of enterprises; 3 it is to reduce barack Obama and Hillary Clinton to restrictions on energy infrastructure projects, the further development of the domestic energy industry, including shale gas, not only ensure energy independence, and to create energy for manufacturing cost advantages; Four is foreign trade protection policy, by removing harm the interests of the American free trade agreement, tougher trade sanctions and raise trade barriers, prompted the U.S. manufacturing back to the United States.
In the United States, our country is also in the force. Currently, "made in China 2025" is entered into a new stage by document preparation. Five big project implementation guidelines and service-oriented manufacturing, equipment manufacturing industry quality brand, development of medicine industry and three action or enforcement of the planning guide, information industry, new materials and manufacturing personnel three planning guide the upcoming, compiled "1 + X" planning system. A "made in China 2025" points and guide, approval of five cities and three urban agglomerations (group) pilot demonstration, adjust measures to local conditions, outstanding features, regional linkage, dislocation competition of manufacturing development new pattern has been formed. A number of major landmark projects have been implemented, and the development of high-end equipment has achieved a series of major breakthroughs. A series of "neck" problems have been solved.
The analysis shows that the strongest competition between China and the United States is manufacturing, and both countries are taking unprecedented steps to develop and revitalize their manufacturing industries. Can be predicted that China and the United States who can succeed in domestic manufacturing industry in the development of and access to advantage, who can be on the bilateral relations between the two countries and the international status of seizing the initiative.