Is China’s manufacturing industry moving out? 3 reasons for them to stay
According to data released by the General Administration of Customs, the total import and export volume of China’s foreign trade in the first half of this year was 14.67 trillion yuan, an increase of 3.9% over the same period last year. Among them, exports grew by 6.1%, the growth rate was the same as in the previous five months, and imports continued to grow.
Is China’s manufacturing industry emigrating overseas? 3 reasons for them to stay
Bai Ming, deputy director of the International Market Research Institute of International Trade and Economic Cooperation of the Ministry of Commerce, attended the China News Agency-sponsored National Forum-Mid-2019 Economic Situation Analysis Conference on the 15th, saying, “Observing from China’s import and export data in the first half of the year, foreign trade has initially stabilized and been improved steadily.“
When it comes to the moving out of China’s manufacturing industry, Bai Ming pointed out that, as far as China’s strong manufacturing power is concerned, the relocation of manufacturing industry will not have a devastating impact on China’s manufacturing industry in short time. Those countries do not have China’s advantages of scale economy, industrial association and industrial agglomeration.
Foreign trade in the first half of the year: In a stable and resilient growth
When the foreign trade data were released in the first half of the year, Li Kuiwen, spokesman for the General Administration of Customs, said, “China’s foreign trade in the first half of the year showed strong resilience. This resilience comes from enterprises’ efforts to cope with trade frictions and actively explore international markets. It is also directly related to China’s continued opening up and the intensive introduction of a series of stable foreign trade policies.”
Referring to the positive factors of stabilizing foreign trade in the first half of this year, Bai Ming believes that the current growth of China’s foreign trade is mainly due to the smooth progress of China ASEAN Free Trade Area, Sino EU economic and trade cooperation and the “one belt and one way” initiative.
But Bai Ming also pointed out that the foreign trade data published at present are based on RMB, which used to be dominated by US dollar. In the first half of this year and the first half of last year, the RMB has depreciated against the US dollar. Therefore, if the unit of valuation is converted into US dollars, the foreign trade data will decrease. “Therefore, we should make further efforts to stabilize foreign trade.”
Bai Ming also said that a number of excellent enterprises, such as Huawei and Haier, have contributed a lot to China’s import and export, but there is no other team member who is particularly competent to relay Huawei and Haier at present.
2 side effects in the international division of labor
Talking about China’s position in the economic globalization and in the international division of labor, Bai Ming believes that the most important thing is to form 2 side effects. One side is affected by the trade war, and the other side benefits the economic globalization.
Bai Ming pointed out that public data showed that as of May this year, South Korea’s foreign trade had declined for six consecutive months. The most fundamental reason, and also the biggest impact on it, is the Sino-US trade war. For example, most of the chips or components used in China’s exports to the United States are imported from Japan and South Korea. Rising the import and export barriers by the United States will inevitably affect the export data of Japan and South Korea. This is the so-called making the innocent bystanders get into trouble in a disturbance
Bai Ming explained that China has transferred more industries to Vietnam in recent years because of its advantages in labor cost and system. With the entry into force of the free trade agreement between Vietnam and the European Union recently, Vietnam will benefit not only from America, but also from the European market in the future.
There are concerns in the market, will the overseas manufacture emigration have a devastating impact on China’s manufacturing industry? In Bai Ming’s opinion, as far as China’s important manufacturing status is concerned, the emigration of manufacturing industry in a short time will not have a devastating impact on China’s manufacturing industry. For the time being, these countries do not have China’s advantages of scale economy, industrial association and industrial agglomeration.
But Bai Ming also pointed out, “We should not be too optimistic. Although Vietnam, Cambodia, Myanmar and other countries have a small number of economy volumes, they reduce and exempt tariffs from each other and join in many other facilitation arrangements under the ASEAN system, which further lowers the threshold of resource allocation between them. This will greatly help them form a larger economy and produce industry linkages. It will take some time, but we can’t take it lightly.”
Effects on vape industry
Vape industry is transferring from labour-intensive industry to technology-intensive industry. Many vape companies including ALD, FEELM are investing more capital on technology research and product development. Some technologies are recognized worldwide by winning international high-tech awards like Golden Leaf, Red Dot, etc. Meanwhile, more and more auto-machine robotic production lines are launched which turns the labor cost advantage into automatic large scale product advantage. Therefore, vape industry in China will not see obvious relocation in the near future or even witness some new strong growth with the emergence and growth of the domestic market and ceaseless growth of the international e-cig market.