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Big country competition is a contest of economic strength
The fundamental basis and core logic of the strongest focus judgment is that competition between big powers is essentially a contest of economic strength. This is the basis for competition in other areas; and manufacturing is the main and key element of economic strength. Trump's savvy efforts to rebuild the U.S. manufacturing industry are highly focused. On the one hand, it will increase the threats faced by the U.S. manufacturing industry in China's manufacturing industry. On the other hand, the comparative changes in the strength of the manufacturing industry will change the overall competitive situation between the two countries. .
In order to solve the hollowing out of domestic manufacturing and a large number of labor unemployment issues, Trump has substantially reduced taxes and deregulation of the U.S. economy to promote the return of manufacturing industries and revitalize U.S. manufacturing. Many of the scholars believe that Trump's practice is not feasible, because the United States has high labor costs and production costs. After the manufacturing industry returns, it will face higher costs than foreign countries. Some scholars use the example of President Reagan as an example. Reagan’s neo-liberal economic policy vigorously promoted tax cuts and deregulation, but the US manufacturing industry started outflowing from this period. For the analysis of Reagan's approach, we need to understand two things: First, Reagan’s neo-liberal economic policy has laid the foundation for the economic glory of the United States in the next few decades, and second, the cost comparison of manufacturing between China and the US ratio.
The average annual growth rate of real wages in China has exceeded 10% since 1997. The average increase in actual labor productivity is only about 2.5%. Even in recent years, there have been signs of cessation of growth. However, the actual labor productivity growth in the U.S. manufacturing industry is very significant, and the increase in labor wages has stagnated or even declined. This has led to a significant increase in the U.S. capacity and space to overcome production costs through production efficiency. In addition, China’s dependence on oil and natural gas imports has increased year by year, and the shale gas revolution has erupted in the United States, making it the largest energy producer in the world. The shale gas revolution has enabled shale gas-based U.S. energy prices to be significantly lower than traditional oil and gas prices on the international market, and the United States can greatly reduce energy costs. The different changes in production efficiency and production costs of China and the United States have caused China’s manufacturing industry to be seriously eroded compared to its previous cost advantage.
U.S. manufacturing revitalization plan is very feasible
According to the results of the Boston Consulting Group’s calculation of the manufacturing costs of the 25 global export economies, China’s cost advantage relative to that of the United States has almost disappeared. The company's estimated total cost of manufacturing includes four factors: worker hourly wage, labor productivity, energy cost, and exchange rate. The calculation results show that the US manufacturing industry's overall average cost index is 100, and China's manufacturing industry's overall average cost index is in 2014. It has risen to 96 quickly, compared with the United States, it has only 4 points advantage. Moreover, the advantages of our country are only reflected in labor costs. Considering that China’s labor wages are rapidly rising, industrial land prices and property prices are also rising faster, and corporate tax burdens and other factors, China’s manufacturing cost advantage relative to the United States is likely to continue to weaken. Under the current situation of cost comparison between China and the United States, Trump’s manufacturing return and revitalization plan has strong feasibility.
Before Trump took office, the U.S. government has begun to promote the backflow of manufacturing, and Trump's administration will greatly accelerate this process. The financial crisis that erupted in 2008 severely hit the economies of developed countries, but it also forced the governments of developed countries to re-emphasize the development of their own manufacturing industries. The Obama administration made it clear that "manufacturing returns to the United States" and achieved certain results. The U.S. manufacturing industry showed a clear return and recovery, and the equipment manufacturing industry rebounded even more than Germany. Moreover, the recovery of the manufacturing industry in the United States is a high-end industry. The high-end industry in the United States needs to meet two standards at the same time: First, the R&D expenditure of each industrial worker should exceed US$450, or be located in the top 20% of the industry; Second, STEM (Science, Technology, Engineering, and Mathematics) should be obtained in the industry team. The number of degrees must be higher than the national average, or the proportion in the industry should reach 21%. Industries that meet these two criteria are all industries where innovation is most active and can best guarantee sustainable growth. The return, recovery and revitalization of high-end industries in the United States will surely pose serious threats and challenges to China’s manufacturing industry that is undergoing transformation and upgrading.
Both China and the U.S. are making every effort to develop and revive the manufacturing industry.
While the United States is revitalizing the manufacturing industry, China is also vigorously advancing and implementing the strategy of building a strong nation. The most direct strategy is “Made in China 2025â€, which proposes specific strategies for developing and revitalizing the manufacturing industry, initiatives, methods, industries, steps, stages, goals, etc. Afterwards, China has also proposed to implement supply-side structural reforms. Develop and revitalize major reform initiatives that are closely related to manufacturing. The degree of science, degree of implementation, and effectiveness of these strategies and policies in China will determine the degree of revitalization of China's manufacturing industry.
After Trump took office, the U.S. policy has greatly increased, mainly as follows: First, the corporate income tax has been reduced from 39% to less than 15%; the depreciation of fixed assets has been accelerated; enterprises have been allowed to bring their overseas profits back to the United States. A one-time tax at a tax rate of 10%; second, abolishing a large amount of controls to increase the burden on businesses; and third, reducing Obama and Clinton’s restrictions on energy infrastructure projects and further developing the domestic energy industry including shale gas, both to ensure energy independence. , It also creates cost advantages for manufacturing industries. Fourth, it adopts trade protection policies to promote the return of U.S. manufacturing industries by removing free trade agreements that harm U.S. interests, adopting tougher trade sanctions and raising trade barriers. Native American.
While the United States is working hard, China is also making efforts. At present, "Made in China 2025" has been documented into a new phase of full implementation. The implementation guidelines for the five major projects and service-oriented manufacturing, quality brand enhancement for the equipment manufacturing industry, and development of the pharmaceutical industry will be issued and implemented. Three planning guides for the information industry, new materials, and manufacturing talents will be released soon. “1+ X "planning system is completed. A guidebook on the “Made in China 2025†provinces and cities was issued, and 5 cities and 3 city groups were approved to carry out pilot demonstrations in cities (groups). A new pattern of manufacturing development based on local conditions, prominent features, regional linkages, and dislocation competition was initially formed. A number of major landmark projects were implemented and high-end equipment development achieved major series of breakthroughs, and a series of “cockpit†problems were resolved.
The above analysis shows that the strongest focus of competition between the two major powers in China and the United States is manufacturing, and both countries are adopting unprecedented measures to develop and revitalize their manufacturing industries. It can be predicted that if China and the United States can succeed in gaining access to their own manufacturing industries and gain advantages, they will be able to seize the initiative in the bilateral relations between China and the United States and the international status of the two countries.
After Trump was elected as president of the United States, the competitive situation between China and the United States will change significantly, even fundamentally. Most people think that the focus of competition between the two major powers in China and the United States is on trade protection, globalization, exchange rates, and international investment. However, I don’t think that all these aspects are the strongest focus of competition between the two countries. Manufacturing is The strongest focus of competition between the two major powers.