Macro Interpretation: China's Manufacturing Industry Breaks the Board to Boost Domestic Demands

At present, the predicament faced by China's manufacturing industry is not a problem in the manufacturing industry itself, but a problem in the social structure with a wide gap between the rich and the poor. In this case, it is necessary to begin by adjusting the social structure.

For China, it is more pressing than promoting the level of manufacturing. It is the implementation of comprehensive social and political reforms and the relative equalization of social distribution.

The biggest hope for the current break-through in the manufacturing industry lies in the revitalization of domestic demand, the increase in the proportion of the middle class, the increase in the level of national income, and the active introduction of mass consumption, prompting China to embark on a long-lasting road.

Recently, the State Council held an executive meeting to discuss the adoption of the "Twelfth Five-Year Plan for National Strategic Emerging Industries Development Plan" (hereinafter referred to as the "Planning"). “Planning” puts forward the key development directions and major tasks of the seven strategic emerging industries. It is true that the development of strategic emerging industries is an important strategic task. Given the current downward pressure on economic operations, it is of great significance for maintaining a stable and rapid economic growth over the long term. However, to promote the healthy development of strategic emerging industries, we must give full play to the basic role of market allocation of resources, focus on optimizing the policy environment, stimulate the enthusiasm of market participants, strengthen independent innovation, and enhance the ability of independent development. At the same time, the development of strategic emerging industries must not take the path of development at the expense of manufacturing.

Since the "Twelfth Five-Year Plan" period, all parts of the country have been rushing to develop strategic emerging industries as a way to break through in the future, ignoring "Made in China", and even many places have traditional industries as backward production capacity. The rise of cages for bird-watching in all parts of the world will surely be quick and easy. The strategic emerging industry currently accounts for only 10% of the total, although the potential is huge, but from the potential to the reality, it is still unknown.

Taking the solar energy industry as an example, 46 countries around the world regard it as the pillar of the emerging industry in the future, and almost all provinces and cities in the country will regard it as the key development industry in the future; in the high-tech industry, the gap between China and the world is huge. China’s most advanced aerospace industry has fallen behind the world’s advanced level for more than 10 years. The large-scale aircraft project just launched is almost self-made in China and is difficult to implement. The core technologies are controlled by the developed countries such as the United States, France, and Israel; In China's most competitive home appliance industry, the core technologies are in the United States, Japan and South Korea, and even in the LED field. Chinese companies are also completely controlled by Japan and South Korea. In the automotive field, core technologies are controlled by the United States, Germany, Japan, and other countries. Although China has become the world's largest automotive country, but the high-end cars on the market, such as BMW, Audi, etc., are almost all German goods.

In fact, as far as China's position in the global industry chain is concerned, China is still at the bottom of the global industrial chain. For strategic emerging industries, the upgrading of Chinese companies’ industries is constrained by core technologies and will be difficult to achieve in the short term. For the greater inland areas, the most severe tasks in the future may not be strategic emerging industries, but the transformation and breakthrough of traditional industries. As a country with strong but low per capita income, the huge domestic demand of the domestic people still needs to be met through traditional industries. Manufacturing is still the foundation of China’s founding.

At the outset of the financial crisis, China’s GDP growth rate had plummeted to 6% due to a sharp drop in exports. If it is not the government’s “4 trillion” stimulus plan, some experts believe that it may fall to 2% or even negative. The influence of foreign demand on China’s economy has been so great. This just contradicts the serious imbalance between China’s domestic demand and its manufacturing capacity. In other words, assuming that China’s domestic demand has sufficient spending power, it is possible to eat out those “Made in China” products that have been created after the sharp reduction in external demand. This will not only enable China’s economy to be balanced, but also lead to higher living standards for the people. A large number of foreign products that are cheap and affordable can be enjoyed by ordinary people in the country.

Although this is an "idealist" hypothesis, it also proves that: We have a strong enough manufacturing capacity, but we can not allow our people to fully enjoy "Made in China." This is like a person in a family who is very competent, but most people are not rich in their days. What are the causes of this strange phenomenon? Without it, the gap between the rich and the poor is too great: Although most people are capable, they have so little income that they cannot afford to produce their own products; while a small number of people do get rich, but they cannot digest so many ordinary commodities. So it can only be exported at a low price.

In fact, the increase in the level of manufacturing in China over the past few years has been largely driven by external demand. The "steady-growth" strategy is not right on the "strategic emerging industries" with uncertain prospects. It is better to focus on improving the competitiveness of the manufacturing industry. Of course, this is right. However, the current predicament faced by China's manufacturing industry is not a problem in the manufacturing industry itself, but a problem in the social structure where the disparity between the rich and the poor is a problem. In so doing, it is necessary to begin by adjusting the social structure. As the financial crisis and debt crisis have led to a sharp drop in demand in Europe and the United States, China’s manufacturing industry has largely lost the “stimulus” role it has gained in the past. It is safe to say that the current manufacturing industry has to meet current domestic consumption levels. Therefore, it is difficult to gain momentum in the short term; while the demand of a few rich people for high-end goods and even luxury goods, domestic manufacturing can not meet, and the "stimulus" can only be foreign supply capacity. Therefore, before the above-mentioned malformed distribution structure and consumption structure have been successfully adjusted, we are not optimistic about the further improvement of China's manufacturing industry, let alone those “strategic emerging industries” far away from us. From this point of view, for China, it is more pressing than raising the level of manufacturing is to implement a comprehensive social and political reform, which is the relative equality of social distribution.

At the same time, strategic emerging industries are the growth pole of the future economy. At the beginning of development, they need market trial and error. The way to find the best market position and future is through industrial competition. The prospects of any industry development are not artificially set. We see that the best industries in the new industries that are now appearing and developing in the competition. They have achieved the transcendence of the old industries and past corporate overlords. Therefore, we believe that encouraging competition is the top priority. In particular, we must be alert to the fact that some monopolies now use their market advantages to block private enterprises from entering new markets and new areas.

However, we are now also more worried that the advantages of monopoly operations in some traditional industries squeeze the profit margin of private enterprises, resulting in many private capital "de-industrialized" investment, the pursuit of "short-quick" speculation, and even to fry garlic, stir-fried beans, stir-fried Coal and fried cotton. If this trend continues and expands, China’s economy will generate a larger bubble, which is detrimental to the people’s livelihood, and it will also affect the technological innovation and economic development due to the reduction of market competition. Conversely, if private capital is involved in a strategic emerging industry that is in the early stages of development, it will be able to gain market share in the early stages. This will make private capital very interesting and dynamic, and to a certain extent, reduce the “de-industrialization” of private capital and avoid it. The formation of non-headed, flutter-like market investment chaos.

Some experts have given relatively good suggestions in this regard: As the main risk of private enterprises lies in profit and loss, the focus of policy support is to ensure the safety and benefits of private investment in order to maximize the sharing and weakening of investment risks. Therefore, on the one hand, private enterprises are given the right to use social production factors and social resources in a fair manner. On the one hand, the irrational administrative charges for private enterprises and the higher tax burden can be reduced or exempted. Taxes can be “profitable” or “taxed.” "Pay" to attract high-end talent; In addition, in the context of economic fluctuations, private enterprises can be given appropriate financial support and compensation.

We must not have too much expectation for strategic emerging industries, let alone take it as the driving force for economic development. It is just like a kind of speculativeism. China needs to pay more attention to "Made in China." If the manufacturing advantage is lost, China will have nothing, and China still needs to stick to manufacturing. At the same time, we will increase the cultivation of strategic emerging industries as a hope for the future, and the biggest hope for the current manufacturing industry to break through is the revitalization of domestic demand, increase the proportion of middle class, increase the level of national income, and actively guide mass consumption, promote China. Embark on a long journey.