The Essence of Competition Between the US and China

Published in Zaobao
(China) on 24 August 2012
by Bao Shenggang (link to originallink to original)
Translated from by Christine Xiao. Edited by Heather Martin.
The competition between the U.S. and China is related to political and military power, institutions and values. But it is more about economic competition, of which the essence is the race in the manufacturing sector. In President Obama’s words, the purpose of U.S. re-industrialization is to make future manufacturing jobs not rooted in China and India anymore, and thus create more jobs for Americans and achieve economic sustainability. Obviously the manufacturing industry is the basis of national employment and government taxes. The U.S. is aware of this and has launched a gigantic re-industrialization program. Then, where will China’s manufacturing industry go from here? China faces a tough challenge.

According to a survey, about 40 percent of American enterprises planned to move their plants back to the U.S. Since last November, foreign direct investment has had negative growth, except for in May, when it experienced a brief positive growth rate of 0.05 percent. In June foreign direct investment decreased by 6.87 percent compared with the same period of last year. The U.S. was the world’s largest industry capital exporter. However, as the U.S. re-industrialization program moves ahead, the trend of its capital and technology exportation will gradually reverse. The U.S. will probably turn from being a net exporter of foreign direct investment into an importer of foreign direct investment, which will not only bring back American capital, but also help it attract global capital using its various advantages and huge markets, making China lose its appeal.

In August 2010, the U.S. Congress passed the Manufacturing Enhancement Act to suspend or reduce tariffs on imported raw materials for use in manufacturing. The report by U.S. National Association of Manufacturers indicated that this act would increase output by $4.6 billion and create about 90,000 jobs. The "Creating American Jobs and Ending Offshoring Act" proposed in Sept. 2010 would provide payroll tax relief for companies that bring back outsourced jobs for 24 months and stop providing subsidies for companies that operates overseas, such as tax exemptions and reductions. In his third State of the Union address early this year, Obama outlined themes for his 2012 presidential re-election race and promised to build on four major pillars — American manufacturing, locally generated energy, worker technical training and American values — to bolster U.S. economic development. The Obama administration has even said that it will set up a special trade enforcement agency to investigate trade activities of countries such as China to recapture its lost manufacturing advantages.

For the past 30 years, the demographic and resource dividends have been the greatest driving force behind China's fast-growing economy. The world's largest population as well as its demographics have not only supplied sufficient labor for China's economic growth, but also created favorable conditions for high rates of accumulation and enormous capital investments. Because of its abundant resources and their comparatively low price, China's marginal return ratio on capital usually has been higher than that of developed countries. Global production capital has favored China. However, as the advantage of its “demographic dividend” is weakening, the gap between production costs in China and the U.S in certain industries is narrowing rapidly. It is predicted that China’s wages in dollars will increase by 15 to 20 percent annually, which will surpass the productivity growth rate. Taking the U.S.’ relatively higher productivity into account, the big gap between labor costs in China’s coastal areas and some U.S. states with low labor costs is likely to decrease to 40 percent or even lower than its current level by 2015. If considering shipping costs, various hidden costs and supply chain costs, China’s overall cost advantage will become pretty small.

China Factor Prices Go Up

Factor prices in China went up in general. Since 2010, the cost of electricity has increased by 15 percent. The increased cost of imported steam coal and the ending of preferential tax policies for high energy-consuming enterprises have raised the operational costs of these enterprises, which account for 74 percent of China’s power consumption. In addition, the industrial lands are not cheap anymore. In fact, the price of commercial land in China has greatly surpassed that of the U.S. In coastal areas such as Ningbo, the price of industrial land is $11.15 per square foot; in Nanjing it is $14.49, Shanghai $17.29, Shenzhen $21. On average China’s industrial land price is $10.22 per square foot. By contrast, in Alabama the price of industrial land is from $1.86 to $10.22 per square foot. In Tennessee and North Carolina the price is from $1.30 to $4.65. China would reduce the cost of land by moving to the west, but logistics costs would increase greatly and the convenience brought by the coastal industry cluster would likely be lost.

Apart from the ever-narrowing gap between the cost of labor in the U.S. and China and the various stimulus measures that Washington has taken, China also faces the challenge of promoting innovation and development in its manufacturing technologies. The U.S. vowed to continue leading high-end manufacturing and prepare technologically for a new industry revolution. In the past two years, although it has been hard for the U.S economy to improve remarkably; the government research and development budget has never been reduced. In 2011 it was $148 billion. And the input for corporate research and development was far more than this figure. Last year Microsoft’s research and development investment hit $9.5 billion, of which 90 percent was invested in the critical “cloud computing.” Intel, being the second largest investor, invested $6.5 billion in technology development last year. Among the biggest 30 global information technology investors, 12 are from the U.S.; second is Japan with 10. China only has Huawei on the list. In 2011 the U.S. research and development investment accounted for 33 percent of its global investments, 2.5 times that of China. High-end manufacturing is the key goal of the U.S.’s re-industrialization program. The U.S has officially released its high-end manufacturing plan and expedited the flow of funds and technological inputs into nanotechnology, high-grade batteries, energy materials, biomanufacturing and a new generation of microelectronics and advanced robots. The U.S. expects these moves to boost the development of high-end technologies and help it become the leader in high-end manufacturing technologies.

The strength and prosperity of a country depends on the degree of its industrialization. The U.S. and Europe faced hardship caused on the one hand by deindustrialization that resulted in the rapid loss of low-end industries, and on the other hand by re-industrialization that was too weak to move ahead. All of these resulted in the stagnation of economic growth, high unemployment and huge financial deficit. By contrast, China was experiencing a historic rapid development of industrialization, which was the basis for the rise of China. But now in global financial crisis, the demand becomes weak and the labor costs go up. If China does not consider industrialization, deindustrialization and re-industrialization in time, it will inevitably face the same hardships as the U.S. and Japan and fall into a recession.

Not long ago, China was discussing the gross domestic product headache, as the purpose of economic growth is not only gross domestic product. But now China’s gross domestic product is already falling to below 8 percent. If the economy continues downward and interferes with the gross domestic product, China will become more worried.


中美之争既是政治军事上的,也是体制与价值观上的,但更是经济上的,而中美经济之争的实质在于制造业的争夺,用美国总统奥巴马的话说,美国再工业化的目的就是让明天的制造业岗位不再扎根中国和印度,由此为美国人创造更多的工作机会,并实现经济的可持续性。显然制造业是一个国家就业与政府财税的基础,对此美国已经清醒过来,美国制造回归声势浩大,那么,中国制造又将何去何从?这是摆在中国面前的严峻挑战。

  据调查,有近40%的美国企业准备把工厂从中国迁回美国,外商直接投资(FDI)自去年11月份以来,只有5月份同比出现0.05%的短暂正增长,其他月份均为负增长,其中6月FDI同比回落6.87%。美国曾是世界上最大的产业资本输出地,但随着美国“再工业化”战略的有序推进,美国资本和技术流出将逐渐逆转,可能由海外直接投资净输出国转变为净输入国,这不仅会导致美国资本回流,而且其种种优势和巨大的市场还会吸引全球资本,使中国的吸引力下降。

  2010年8月,美国国会通过《制造业促进法案》,将暂停或降低供制造业使用的进口原料的关税。美国全国制造商协会的报告显示,该法案可能使产值增加46亿美元,并创造近9万个就业机会。2010年9月的《创造美国就业及结束外移法案》提出,将为从海外回迁就业职位的企业提供为期24个月的工资税减免,并终止为向海外转移工厂和生产企业提供的数项补贴,如免税和减税。今年初,奥巴马发表第三次国情咨文,确定其2012大选竞选主题,并提出由美国制造、本土能源、劳工技术训练与美国价值等四大支柱,建构国家永续经营建设的蓝图,美国甚至要成立贸易执法部门调查中国等国贸易行为,誓言把流失的美国制造夺回来。

  在过去的三十年中,要素红利是中国高速增长的第一驱动力。有利的人口因素不仅为经济增长提供了充足的劳动力供给,也为高积累率和巨大的资本投入创造了条件。在各种有利条件下,投资中国的资本边际收益率通常高于发达国家,全球生产性资本不断流入中国。然而,随着人口有利优势的消失,中美两国部分行业劳动力成本差距快速收窄。据预测,以美元计的中国工资将每年增长15%-20%,超过了生产率增速,在考虑美国较高的生产率后,中国沿海地区与美国部分低成本的州之间劳动力成本以往巨大的差距有可能到2015年将缩减至目前水平的40%以下。如果考虑航运成本以及各种隐性成本、供应链成本,中国的总体成本优势将变得微小。

中国要素价格普遍上升

  另外,中国的要素价格普遍在上升,2010年以来,中国的电力成本已飙升了15%。进口动力煤的价格上涨和对高耗能企业的优惠税率的终止,也推高了这些占中国电力消耗74%的行业的经营成本。此外,中国工业用地已不再便宜。事实上,中国商业用地的价格已经大大超过美国。在沿海城市宁波工业用地的成本为每平方英尺11.15 美元,在南京为14.49 美元,在上海为17.29 美元,在深圳为21 美元。中国全国平均为每平方英尺10.22美元,相比之下,美国阿拉巴马州的工业用地,每平方英尺成本只有1.86美元至7.43美元,田纳西州和北卡罗莱纳州为1.30美元至4.65美元。虽然向西部转移可以降低用地成本,但企业物流成本会出现较大上升,并有可能失去沿海的产业集群便利。

  中美制造业之争除了成本差距逐渐缩小,更多的是来自于创新和技术的挑战。美国誓言要在高端制造业继续保持领先,并在为新的产业革命做好技术储备。最近两年,尽管美国经济基本面难有大起色,但政府研发预算并未减少,2011年即达1480亿美元;企业研发投入则远远超过这个数字。仅微软一家,去年的研发投入即达95亿美元,其中90%投向了极为关键的“云计算”领域,排名第二的英特尔去年技术投入也有65亿美元。在全球IT企业研发投入30强中美国有12家,其次是日本,有10家,中国只有华为一家企业上榜。2011年美国研发投入占全球份额的33%左右,是中国的两倍半。高端制造是美国“再工业化”战略的核心目标,美国已经正式启动高端制造计划,积极在纳米技术、高端电池、能源材料、生物制造、新一代微电子研发、高端机器人等领域加强攻关,这将推动美国高端人才、高端要素和高端创新集群发展,并保持在高端制造领域的研发领先、技术领先和制造领先。

  工业化是现代国家崛起与富强的基础,过去的20年欧美发达国家面临的困境是一方面去工业化,低端产业加速流失,另一方面再工业化乏力,难以推进,导致经济增长停滞,失业率居高不下,财政陷入巨额赤字。与此相比,中国正处于工业化大发展的历史时期,这是中国崛起的基础,但是全球金融危机,需求疲软,劳动力成本的提升,中国如果不及时考虑工业化,去工业化以及再工业化的问题,也将不可避免面临与欧美以及日本同样的困境,陷入失落和衰退。

  不久前,中国还在讨论国内生产总值(GDP)的烦恼,因为经济增长的目的不是仅仅为GDP,但是目前中国GDP破8,如果经济持续下行,如果没有GDP,中国显然将更烦恼。

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