Reviving American Manufacturing Is Good for China

Lately, there has been some controversy over whether the virtual economy has disrupted the physical economy. The Chinese manufacturing industry’s use of the internet and other financial means to grow is the way of the future and cannot be interrupted. Manufacturing cannot develop in a completely insular environment; the key is to make the industry enjoy healthy growth with the support of new technologies, new business models, and new business patterns in an orderly fashion. Any potential disruption depends on whether the manufacturing industry is unshakable, and if the players in the physical economy are sincere in supporting the growth of Chinese manufacturing. Manufacturing is the foundation of China’s development and the root of the Chinese economy, without which the Chinese economy cannot have a long life. Players involved in the virtual economy should also embrace this sense of historic mission and promote the growth of China’s physical economy.

A few years ago, when Barack Obama first mentioned reviving the American economy, he said it was necessary to build the American economy on a rock and not the beach, which greatly impressed me. According to Cao Dewang, a successful Chinese businessman, while American labor costs are high, its costs in other areas are much lower. The growth of alternative fuel sources has greatly reduced the price of American fuel in recent years. As a longtime manufacturing giant, America’s related processing abilities, level of logistics, and level of advanced technology are all in great shape, so American manufacturing has a bright future. In 2007 and 2008, the financial crisis triggered by America disrupted the entire globe. Now, with Donald Trump demanding the return of “Made in America,” it is a great thing for the world’s largest economy.

The incoming American administration will certainly bring a lot of unpredictability to this unprecedented volatile global climate. Based on my observations and experience, China-U.S. relations, especially economic and trade relations, will face some obstacles and ups-and-downs, but will continue to undergo stable and healthy development.

Some people think that China-U.S. trade relations are currently at a difficult stage; however, anyone who has worked in this area at all in the past 20 years can tell that no matter the current situation, it is not as challenging as it used to be. For example, in 1998, China and the U.S. held negotiations about opening up China’s banking industry. This was when the four biggest Chinese banks had fewer assets than America’s Chase Bank. After difficult discussions, China was able to resist the pressure while America also offered some understanding and kindness, enabling an agreement to be reached. If China and the U.S. could reach a consensus with such economic and financial disparity back then, then they are much more likely to reach an agreement now, given the much smaller gap between the countries.

The worst outcome from economic and trade discussions and relations between any two countries is to have no winners. China and the U.S. have deeply intertwined relationships, with $560 billion in annual trade volume, and $160 billion in annual investment. If the China-U.S. relationship were damaged, then the loss to both sides would be very severe, which is why we have worked as hard as we did to avoid such a result. Ultimately, the victims would be the people, the Chinese people and the American people. I want to emphasize that if the worst were to happen, while both countries would suffer, China, possessing a unique political and economic system, would be able to sustain and recover from any damage much better than America.

China-U.S. relations could also present some pleasant surprises with the arrival of the new administration. For example, China and the U.S. could look for partnership opportunities with respect to construction on the Belt Road initiative, including opportunities for partnership with the Asian Infrastructure Investment Bank. There could be partnership opportunities with the revival of American infrastructure-building and manufacturing. In fact, a group of excellent Chinese business leaders have already begun some enormous manufacturing projects in the United States. This is a critical part of building a closer China-U.S. relationship. China and the U.S. could create very robust partnerships in this area. The best way to respond to the unpredictability in the international arena is to ensure the predictability in China’s political, economic, and social development.

The author is the former minister of foreign trade and economic cooperation. The article is organized from a speech and related interviews he gave at the 2017 3rd Annual Return to China Gala, an event hosted by People’s Tribune Magazine of People’s Daily.