Who can shake China’s dominate position?

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• 日期: 2014-07-28
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China is enjoying the reputation of "world factory"。 The manufacturing industry has been leading the world for thousands of years. As a country with hundreds of millions of labor force, the world factory status is very important to China. Will China lose this important economic sign? Although in the past 30 years, China continues to gain the market share, since 2001 China joined the WTO, the development growth has been accelerating. China is changing the global manufacturing industry. But with the increase of wages and labor unrest, Chinese economy is changing. Does it mean that China’s dominate situation in the global manufacturing is coming to an end?

A large number of labor supply, the high level of investment in infrastructure, the stable political environment and good education have made China surpass USA, becoming the country that has the highest output value in the world. This makes China become more prosperous, but at the same time, it also brings the pressure of increasing the wages and improving the working environment.

At the same time, since 2004, labor shortage in coastal areas gradually evolved into the common difficulty of employment and salaries increasing. It had greatly increased the manufacturing cost which caused people’s concerned of whether China can maintain the competitive advantage of labor-intensive manufacturing industry or not.

The IMF pointed out in the Country Evaluation Report in 2012 that China’s capital capacity utilization rate had decreased from 80% before the crisis to 60%.

Does it mean China’s dominate position of manufacturing industry will come to an end?

China still plays an role of world factory.

Global Times quoted British media Economist, although in the past 30 years, China made a revolutionary change in global manufacturing, with the increase of wages and labor unrest, Chinese economy is changing.

However, despite the emergence of new trends of supply chain, new infrastructure and enhancing productivity and other factors will continue to make China maintain the competitiveness. The so-called statement that the labor intensive manufacturers will leave China and look for a cheaper destination is exaggerated.

The World Cup is coming. Such a high international stage will still have the shadow of "Made in China".

Four years ago, Yingli Solar company whose head office located in Hebei did the advertisement in South Africa, shining people's eyes. To become famous at one night, Yingli Solar company turned the target to Brazil. This time, they are still the official sponsors and occupy the advertising space. When the television camera sweeps through, you can still see that familiar brand.

Showing on the race court, there are electronic display screen, the mascot toys, 3D dolls, key chains, party products and auto accessories and five major series from China. According to the report, although the World Cup has not yet begun, the Made in China souvenirs have been placed on the container all over the world.

Economist said, through the prediction for many emerging economies from 2013 to 2018, about the comparison of labor productivity rate and wage increasing, we find that few destinations will be more competitive than China and no any other economy’s labor productivity growth will surpass China.

In Asia market, Bangladesh is often regarded as the replacement of China’s low cost export manufacturing. However, the country is running slow in the progress of narrowing the gap with China: the wages increasing speed is faster than China but the labor productivity growth is only half of China. Vietnam's wage growth rate is similar with China, but the productivity growth is quite slow. The Indonesia is same and their business environment ranks behind China.

From 2013 to 2018, most countries' nominal wage growth will be slower than China. But for the crucial economic scale commercial environment, only India comes near China. And the countries that often regarded as China's rival, Mexico, Brazil and Egypt’s productivity will be extremely slow. China will still play a role of the world factory. Reuters website says, China remains ranked the first in world's manufacturing competitiveness. But because of the raising of labor force and transportation cost and the lags behind productivity growth, China's dominate position will "face the pressure".