China has been the world’s largest manufacturing country for 11 consecutive years. How is this done? At this new moment of great change, what challenges will the COVID-19 epidemic and trade frictions bring to China's manufacturing?
In response to the above issues, a reporter from China News Service interviewed Shi Zhan, director and professor of the World Politics Research Center of the China Foreign Affairs University. Prior to this, Shi's three books, "The Hub - China in 3000 Years", "Overflow - The Future History of Made in China" and "Breaking the Cocoon - Isolation, Trust and the Future", have become best-selling social science works and attracted the attention of academic circles.
“The external factor that made China become the world’s number one manufacturing company is mainly the transformation of the global economic structure, and China happened to be at the ‘right’ time.” Shi Zhan believes that the first is the European and American innovation that began in the mid-1990s. Economic transformation has generated large-scale outsourcing needs, which China has been able to undertake. Second, China's accession to the WTO has opened the global market to China and made Chinese manufacturing stronger.
As for internal factors, it is generally believed that China's complete industrial categories, huge market space, complete supporting facilities, and high-quality industrial workers have all contributed to China's manufacturing becoming stronger and faster.
“The Chinese people’s hard work is comparable to that of almost no other country, as well as the strong government. These factors together form a powerful ‘supply chain network’, reducing the overall cost of manufacturing in China to Very low level." Shi Zhan said that the supply chain network is not a simple sum of many factories, but requires more system ecological cooperation. After reaching a huge scale, it will promote a qualitative change in the cost control logic. , making it difficult for other countries to compete with it.
But big does not mean strong. China has a clear understanding of the development level of its manufacturing industry. Miao Wei, former minister of China's Ministry of Industry and Information Technology, said that China is still in the third echelon of the global manufacturing industry and it will take about 30 years to become a manufacturing power.
Shi Zhan believes that in addition to obvious shortcomings in high-end equipment, the shortcomings of Chinese manufacturing include insufficient process capabilities and insufficient independent innovation capabilities. China has a lot of shortcomings in basic research and core technologies, especially the lack of innovation from 0 to 1. In these aspects, China has a long way to go.
The COVID-19 epidemic and trade frictions have exposed shortcomings in China’s industrial and supply chains. Recently, China's Ministry of Industry and Information Technology stated that it will sort out 41 major and sub-categories of industry to find "blank spots" in the industrial chain and supply chain, "strengthen the chain" and "replenish the chain."
Shi Zhan believes that from a security perspective, it is necessary to solve the key "stuck" pain points, but it does not require independent control of all links. In fact, those stuck links are also interdependent among countries. status, as long as you have the ability to counterattack at the most critical link.
The pain point of stuck necks is a safety issue, but most economic links do not involve neck stuck problems. They are just economic issues. As far as economic issues are concerned, all countries should develop based on their comparative advantages, which is the most efficient.
Looking back at the development of the global manufacturing industry in the 20th century, the manufacturing center position has continued to shift, from Europe and the United States to Japan and South Korea, to the Four Asian Tigers, and then to China. Can China continue to maintain this position?
Through an in-depth investigation of manufacturing in Vietnam, Shi Zhan’s team believes that merely moving factories without moving the supply chain network does not constitute a substantial industrial transfer. There is no overseas country that can undertake such a large-scale supply chain network transfer in China. "China's supply chain network has not encountered substantial challenges due to trade frictions," Shi Zhan said.
If there is any factor that can change the global manufacturing landscape, it will be the technological revolution. Shi Zhan believes that a new round of technological revolution is on the horizon, but it is still a single-point breakthrough and has not reached the node of multi-field dynamism. However, there are more and more signs that this dynamism effect is already imminent. For China, it is crucial to ensure that it does not fall behind in the new round of scientific and technological revolution by unleashing the innovative vitality of society.