New Dilemma and New Challenges Faced by Chinese Manufacturing

- Mar 22, 2017-

The New Dilemma and New Challenges Faced by Chinese Manufacturing


China's industrial process of more than 30 years of world attention, Chinese manufacturing also boarded the stage of history, become the focus of attention around the world. However, as other industrialized countries have experienced the development process, China's manufacturing is also facing a new advantage of weakening comparative advantage, overproduction and the difficulties of transformation and upgrading, as well as the global wave of new industrial revolution.


1. Made in China "low cost advantage" gradually decay


As China's "demographic dividend" peak will be over, China's labor supply and demand relations will further reverse the further increase in wages. Although labor costs are relatively low in some industries, the rapidly narrowed wage gap makes it an important factor. According to our estimates, Chinese wages in US dollars are expected to grow by 15% -20% per year, which will exceed China's productivity growth rate. In contrast to China and the United States, after considering US productivity, there is a huge labor cost gap between China's coastal areas and some low-cost states in the United States, and is expected to shrink to below 40% of the current level.


If the cost gap is only a long-term factor, then the key to determining the competitiveness of Sino-US manufacturing industry - the position in the global value chain is a more direct factor.


Since the beginning of this century, multinational companies as the leading elements and the industrial value chain vertical division of the formation and highly structured, inter-industrial division of labor, intra-industry division of labor and product division of labor coexist, to promote a new round of industry transfer between countries The The vertical division of the industry chain, that is, developed countries, multinational companies occupy research and development, brand sales channels and other high-end links, and processing, assembly, manufacturing and other relatively high labor-intensive industrial links to low-cost developing countries. For example, as the North American back garden of the "Mexico" is through the North American Free Trade Area and its own late advantage to become the new US industrial base.


There is no doubt that China has become the world's largest manufacturing power, manufacturing accounted for the proportion of the global rose to 19.8%, but the manufacturing R & D investment accounted for only 3% of the world's manufacturing R & D investment is also low. And the overall view, China's industrial production technology and innovation capacity is still relatively low, technology and knowledge-intensive industries are still relatively weak international competitiveness, industrial labor productivity and the international advanced level gap is still large, the average size of industrial enterprises is still small, Sustainable development capacity is still poor, many traditional industries there are "impoverished" growth phenomenon.


For example, from 2008 to 2010, China's average annual GDP growth rate of 9.9%, but the total economic growth in more than 2/3 for the contribution of capital accumulation. Such a large-scale investment is brought about by the decline in capital efficiency. In the 1990s, China's capital output rate was 3.79, from 2000 to 2007 has increased to 4.25, and then to 2008 to 2009 rose to 4.89, the expansion of capital growth in productivity has produced a "squeeze" effect.


It is estimated that China's manufacturing labor productivity, lower value-added rate, only the equivalent of the United States 4.38%, Germany's 5.56%. China's manufacturing industry in terms of quality and the developed countries there are still gaps. In terms of the contribution coefficient of the middle input, the middle investment of one unit value in the developed countries can get one unit or more of the new creation value, while China can only get 0.56 units of new creation value, the value creation ability is very different. In the United States, the United States, the financial crisis, the US companies to shorten the working hours by reducing the labor input, thereby reducing labor costs, labor productivity can continue to improve. Data show that the third quarter of this year, the US non-agricultural sector labor output year-on-year increase of 4.2%, labor productivity by year rate rose 2.9%, much higher than expected.


2. China's manufacturing is facing a new round of global technology and industrial revolution


So far, the development trend of China's manufacturing industry and the typical pattern of the typical industrial countries are basically consistent, but also show some of the characteristics of catching up the country. From the peak of the industry has been the point of view, consistent with the international experience. At present, China's labor costs rise, the lack of development of productive services, low-end in the global value chain brought about the imbalance in the distribution of international trade and other issues, the upgrading of China's manufacturing industry put forward many challenges.


Especially after the financial crisis, the rise of a new round of industrial revolution, both a digital revolution, but also the value chain revolution. Internet, network, robotics, artificial intelligence, 3D printing, new materials and other breakthroughs and integration will promote the new industry, the new format, the rise of new models, a large-scale production of the world is coming This revolution will not only affect how to manufacture products, but also affect where to manufacture products, will re-shape the global industrial competition. Now, the United States and Europe and other countries to implement the "re-industrialization strategy" to promote the return of manufacturing, information technology, large data, cloud computing, industrial 4.0, industrial Internet + and other unprecedented impact on China, China's manufacturing industry is facing "before Blocking the chase after the "double squeeze.

3. The advantages of manufacturing industry and the serious investment in innovation are seriously inadequate


According to OECD database data, in 2014, US R & D spending reached 46 billion US dollars. China's spending in R & D has tripled since 1998 and R & D investment in GDP has increased from 1.32% in 2006 to 1.98% in 2012. 2013 China's manufacturing R & D intensity is lower than the developed countries in 2008-2009 research and development strength. As the world's largest manufacturing base, China's manufacturing R & D intensity in 2013 was only 0.88%, compared with 3.3% in the United States in 2008 and 2.4% in Germany.


In all industries, high-tech: high-tech manufacturing in major developed countries developed the highest intensity in 2007, the United States reached 16.9%, Japan in 2008 was 10.5%, compared to 2013 China 1.75%; medium technology: the United States R & D The highest strength, 7.5%; 5.1% in the UK, 5.9% in Japan; low-tech: these countries in the low or low-tech manufacturing R & D intensity is very low, basically less than 1%.


In contrast, China's high-tech enterprise R & D intensity is still lagging behind. "Technology and Technology Statistics Bulletin" shows that in 2013 China's high-tech manufacturing enterprises R & D expenditure of 2034.3 billion yuan, accounting for the proportion of manufacturing above the scale of 25.6%; R & D funds into the intensity of 1.75%, more than the size of the manufacturing average The level of 0.87 percentage points higher. The aerospace, spacecraft and equipment manufacturing industry developed a maximum strength of 6.12%. Specific into the sub-sectors of this gap is more significant.

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