Un­stop­pable In­dus­trial Up­grade

China Pictorial (English) - - Contents - Text by Shi Dan

The Trump ad­min­is­tra­tion blames the U.S.’ do­mes­tic trou­bles on China and ig­nored WTO reg­u­la­tions to launch a trade war tar­get­ing the “Made in China 2025” de­vel­op­ment strat­egy. This move, which ig­nores laws of global in­dus­trial de­vel­op­ment, will hin­der the eco­nomic de­vel­op­ment of the world.

This year, the U.S. has per­sis­tently ex­erted trade fric­tion on China, which even­tu­ally trig­gered the first shots of a to­tal trade war. Ad­di­tion­ally, the U.S. has tar­geted the “Made in China 2025” strat­egy, deem­ing China’s as­pi­ra­tions to catch up with the tech­nolo­gies of devel­oped coun­tries and tak­ing over global high­end man­u­fac­tur­ing an “eco­nomic in­va­sion” of the U.S. This ac­cu­sa­tion ne­glected ob­jec­tive law of in­dus­trial de­vel­op­ment, and the mea­sures it prompts will heav­ily dam­age global eco­nomic or­der and the in­dus­trial divi­sion sys­tem.

Since the 1980s, thanks to its re­form and open­ing up as well as low la­bor costs, China has devel­oped a sound busi­ness en­vi­ron­ment that has at­tracted a mas­sive chunk of global man­u­fac­tur­ing, greatly im­prov­ing the coun­try’s in­dus­trial pro­duc­tion sys­tem and in­creas­ing its pro­duc­tion ca­pac­ity. Even­tu­ally dubbed the “world fac­tory,” China has en­riched the sup­ply of in­dus­trial prod­ucts world­wide, ben­e­fit­ing the en­tire planet. Trade between China and the U.S. shifted from deficit to sur­plus with the dra­matic changes in trade struc­ture: China ex­ports mostly man­u­fac­tured goods es­pe­cially elec­tronic com­modi­ties to the U.S. while im­port­ing agri­cul­tural prod­ucts like soy­beans.

The trade re­la­tions and struc­ture between the two coun­tries have re­sulted from their re­spec­tive in­dus­trial com­pet­i­tive­ness and com­par­a­tive ad­van­tages. When the divi­sion of la­bor in global man­u­fac­tur­ing trans­ferred from in­dus­tries to com­modi­ties, China’s com­par­a­tive ad­van­tage be­came prom­i­nent with stronger com­pet­i­tive­ness in man­u­fac­tur­ing low- and mid­dle-end prod­ucts than the U.S. and Euro­pean coun­tries. This has ex­panded China’s mar­ket share rapidly. Rel­a­tively speak­ing, the U.S. and Euro­pean coun­tries lacked com­par­a­tive ad­van­tages in some man­u­fac­tur­ing sec­tors. And dur­ing global in­dus­trial trans­fer and re-divi­sion of la­bor, Chi­nese en­ter­prises took over man­u­fac­tur­ing and pro­cess­ing from U.S. and Euro­pean com­pa­nies, free­ing them up to fo­cus more re­sources on high value-added pro­duc­tion chain steps like de­sign and mar­ket­ing, which fa­cil­i­tated the U.S. and Euro­pean coun­tries in their trans­fer to ser­vice-ori­ented economies.

China’s man­u­fac­tur­ing pri­mar­ily fea­tures low- and mid­dle-end prod­ucts that ex­ert tremen­dous pres­sure on the coun­try’s en­vi­ron­ment. China’s ina’s man­u­fac­tur­ing needs to evolve to a new stage cor­re­spond­ing to its ris- ing la­bor costs. The “Made in China na 2025” strat­egy was thus de­signed to fa­cil­i­tate such an up­grade in ac­cor- dance with ob­jec­tive laws of in­dus­trial trial de­vel­op­ment.

The ad­just­ment of global in­dus­trial divi­sion ob­jec­tively de­mands in­volved coun­tries ac­cord­ingly ad­just ust their eco­nomic and so­cial struc­tures es as well as pat­terns of in­come dis­tri­bu­tion. But dur­ing the in­dus­trial trans­fer of multi­na­tional cor­po­ra­tions, the U.S. govern­ment has not han­dled well the is­sues like em­ploy­ment and wealth dis­tri­bu­tion, caus­ing great trou­ble in the coun­try. The Trump ad­min­is­tra­tion blames in­ter­nal strug­gles on n the con­flicts with China and ig­nored WTO reg­u­la­tions to launch a trade war tar­get­ing “Made in China 2025” 5” strat­egy. How­ever, a trade war can­not not solve Amer­i­can do­mes­tic prob­lems and will only hin­der the eco­nomic de­vel­op­ment of the world.

The “Made in China 2025” de­vel­op­ment strat­egy en­deav­ors to solve ve prob­lems plagu­ing Chi­nese man­u­fac­tur­ing like mod­est prod­uct qual­ity, , ris­ing la­bor costs, dense re­source con­sump­tion and costly en­vi­ron­men­tal al pol­lu­tion. Solv­ing these prob­lems will not harm other coun­tries’ in­ter­ests, s, but im­prove the level and qual­ity of global in­dus­trial divi­sion and co­op­er­a­tion while mak­ing con­stant con­tri­bu­tions to the world. Over the past four decades since China im­ple­mented its re­form and open­ing up, the coun­try ry has grad­u­ally be­come more in­volved ved in global af­fairs and devel­oped its econ­omy by fol­low­ing in­ter­na­tional al rules and norms, be­com­ing a ma­jor or driver of world eco­nomic growth. Op­press­ing the de­vel­op­ment of China—an emerg­ing econ­omy—is akin in

to drag­ging world eco­nomic ad­vance. Don­ald Trump seeks uni­lat­eral trade pro­tec­tion­ism in an ef­fort to change the es­tab­lished de­vel­op­ment track of global in­dus­trial divi­sion and lower the ef­fi­ciency of it. This runs con­trary to the ob­jec­tive law of global in­dus­trial de­vel­op­ment and harms both sides.

If the U.S. stops ex­port­ing high­tech to China and slaps tar­iffs on im­ported Chi­nese com­modi­ties, Chi­nese en­ter­prises will only be im­pacted in the short term. In a long run, run­ning con­trary to the trend of glob­al­iza­tion, Wash­ing­ton’s move will even­tu­ally dam­age the in­ter­ests of Amer­i­can en­ter­prises and peo­ple. The U.S. can­not stop China from trans­fer­ring and up­grad­ing its man­u­fac­tur­ing in­dus­try be­cause the drive is rooted in Chi­nese peo­ple’s as­pi­ra­tions for bet­ter lives. In­no­va­tion is be­com­ing the driv­ing force of China’s econ­omy. Fol­low­ing the ob­jec­tive law of in­dus­trial de­vel­op­ment, the “Made in China 2025” strat­egy presents a roadmap for China to ac­cel­er­ate tech­no­log­i­cal in­no­va­tion in man­u­fac­tur­ing and out­lines poli­cies and a sys­tem to fully uti­lize the mar­ket econ­omy laws to en­cour­age en­ter­prises’ tech­no­log­i­cal in­no­va­tion in­puts. China at­taches great im­por­tance to in­tel­lec­tual prop­erty rights (IPR) pro­tec­tion, which is also an im­por­tant part in im­ple­ment­ing the “Made in China 2025” strat­egy and in build­ing an in­no­va­tion-ori­ented coun­try. China has con­structed and con­tin­ued to im­prove its le­gal sys­tem for IPR. With its huge mar­ket, solid in­dus­trial sys­tem, in­no­va­tion-ori­ented de­vel­op­ment and strict IPR pro­tec­tion, China’s in­dus­trial up­grade will not be stopped by out­side forces.

May 25, 2018: Work­ers as­sem­ble prod­ucts in a com­puter nu­mer­i­cal con­trolled work­shop in an elec­tron­ics ma­te­ri­als fac­tory in Shan­dong Prov­ince. VCG

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