Is China manufacturing in crisis?

Recently, as China's economic growth rate has declined slightly, domestic and foreign have appeared the "Made in China" era is about to end. There are two main sources of argument: one is that the developed countries reduce manufacturing costs to a level comparable to China through technological advances (such as Germany's "Industry 4.0") or energy self-sufficiency (such as the "shale gas revolution" in the United States), and the rise in wages in mainland China, Therefore, transnational capital will be transferred from China to South Asia, Southeast Asia and other regions with lower labor costs.

In fact, these two kinds of arguments can not withstand scrutiny. Due to space limitations, the author only analyses the second type of argument: "Made in China" will not be severely challenged by other developing countries in the near future due to the five advantages described below.

First, the global industry is shifting to the Midwest in China.

"Labor-intensive enterprises in South Asia and Southeast Asia have made strong competition for China's manufacturing industry, the international industrial chain may abandon China", contrary to the general law of modern industrial production distribution, but also with China and neighboring countries, the economic situation is seriously inconsistent.

The current trend in global industrial transfer is not to shift from China to other developing countries, but to move from developed countries to China, and from China's eastern coastal areas to the Midwest inland. I live in the city of Chongqing, in recent years, the establishment of the whole industrial chain of notebook computers.

Second, China has more advantages in terms of industry support and agglomeration.

There are many factors affecting industrial distribution, and labor cost is only one of them. Contemporary, industry supporting and agglomeration, become the core factor of industrial distribution. China is one of the few countries in the world with a complete industrial sector, and most provinces have steel, chemicals, building materials and other industries that can provide intermediate products for other manufacturing industries.

Although some countries have abundant labor resources and young age structure, some new industrial parks are also close to raw materials or energy sources, but because of their lack of industrial base, their manufacturing needs of the building materials, machinery and equipment, depreciation parts are imported from abroad, the overall calculation of its production costs are still higher than China. For example, a friend of the author's investment in Vietnam said that building a plant in Vietnam was almost as if the Chinese factory had been dismantled and transported to Vietnam and assembled.

Thirdly, China has a greater advantage in terms of energy and transport infrastructure.

In addition, infrastructure, education and security conditions are also factors that affect manufacturing costs, and other developing countries are struggling to catch up with China in these areas in the short term.

For example, in South Asia, where electricity shortages occurred in 2012, India had the largest blackout in human history affecting 670 million people, and during a visit to Islamabad, Pakistan, I found that in March, where there was neither heating nor cooling pressure, the rich district had to power down three or four times a day. , according to the Pakistani Keri Energy Research Institute, the Afghan power grid covers only 3% of the population, and 80% of the country relies mainly on firewood for heating and cooking.

In most developing countries, the railway network density is very low, the construction of highways has just started, there are few high-speed railway to facilitate rapid movement of personnel, the lack of suitable for bulk cargo transport of heavy rail. The existing traffic facilities are often not fully effective because of chaotic management or international political factors.

Four, China's national education, labor quality and social security has more advantages.

The majority of developing countries, such as literacy rate, average length of education and college gross enrolment ratio, are generally far below China, and it is difficult to provide modern industrial enterprises with a large quantity of qualified labor at various levels in the short term. At the same time, the long-term agriculture and even the fishing life of people quickly adapt to the rules, fast pace of the factory, office model is also not easy.

Chinese entrepreneurs who invest abroad often complain to the author that the average worker does not have a job at the end of a paycheck, even if a high salary is not found in the local qualified engineers and managers. Therefore, Chinese enterprises that invest abroad can only recruit relevant employees from China.

In China, a lot of enterprises can arrange workers "three shifts", female workers in the early hours to work back to the dormitory is not very safe, which in some countries with poor security is almost impossible to achieve. A large number of adult male labour forces in countries such as Pakistan have joined the security industry because of the long-standing threat of terrorist attacks. I visited the Taxila industrial zone and Karachi CBD, even reached a few steps a whistle, office buildings, each floor of a gun security degree. The poor security condition not only weakens the investment intention of domestic and foreign capital, but also improves the enterprise cost.

The development of labor-intensive industries abroad has not impacted China's employment.

At present, India, Indonesia, Vietnam and other developing countries with relatively rapid economic growth rate of Chinese manufacturing competition, can only be confined to textile garments and other industrial support and workers ' quality requirements are relatively low areas. China's industrial production and exports are already mechanical, electronic products, the overall view of "Made in China" suffered a small impact.

at present, China is not facing the pressure of workers ' unemployment, but the coastal area "labor shortage". Many people in other developing countries are thinking of working in China. For example, Pakistan, a South Asian country with a population of nearly 200 million, ranked 6th in the world, began to queue every day from 3 o'clock in the morning to the people who applied for visas at the door of the Chinese embassy. A number of Pakistani friends have been excited to show the Chinese work visa to the Chinese to work in China proud. The Chinese Embassy in Vietnam is also a sea of faces, which has spawned a printing and photocopying industry. In Yunnan, Guangdong and other countries, the number of foreign illegal immigrants, just to illustrate that "Made in China" is still in the industry and related services to provide a large number of employment opportunities. (Sun Lizhou, vice president, World and China Agenda Research Institute, Southwest University of Political Science and Law)

Is China manufacturing in crisis?