Zhang Monan believes that from the perspective of changes in the global value chain and the global industrial structure, China’s industrial upgrading will inevitably be linked to the United States’ short soldiers. Therefore, we must make good preparations for the long-term war.
The following is a speech record:
Good afternoon, everyone, I know that most of you here are from the financial and financial fields, but the trade issue may be a hot spot for international issues. It is also a focal point. It is a matter that affects the whole body. I have three major speeches today. section.
In the first part, we would like to review with you the global trade trend in 2017. Why has global trade achieved a strong recovery since the financial crisis? Second, from a different perspective, I look more at the perspective of the global value chain. Deep-seated problems, in particular the structural problems behind the outbreak of a trade war between China and the United States, and their impact on global trade and economics. The third forecast is about the risk of future Trump trade conflicts.
In 2017, one of the most important features of global trade was the realization of a strong recovery since the financial crisis. According to related research, for example, the Netherlands Bureau of Economic Policy Analysis predicts that the global trade recovery in 2017 will reach 4.5%, which is much higher than the 1.3% increase in 2016. The rate of positive growth in exports of over 60 member countries of the WTO accounted for 87%, and the positive growth in imports accounted for 89%. Not only emerging economies, developed economies, and the world have achieved a synchronized process in trade recovery.
From the perspective of the recovery region, Asia and North America, thanks to the strong economic momentum of China and the United States, have also achieved the momentum of recovery. Asia is about 6.4%, North America is mainly 4.2% growth. Global trade recovery is global The biggest highlight of the economy.
As a twin engine, China and the United States are equivalent to two major power sources (6.470, 0.01, 0.15%) in the process of economic recovery. For Asia, we know that China is the world’s largest trading middleware and Asia Pacific value chain Leading role in the recovery of global trade. The Asia-Pacific Economic Cooperation Commission’s report predicts that Asia’s role in this round of trade recovery has boosted global trade growth by 5.4 percentage points, which is much higher than the 1.9% and 1.5% in the EU and North America.
From another point of view, we also see that not only in the trade field, but also in the wake of the recovery momentum of China and the United States, in the industrial sector, the global capital goods trade, such as the recovery of the manufacturing industry, has also driven other countries such as resources. Countries, primary product countries, exports increased significantly. In addition, especially the promotion of China's 'Belt and Road' initiative, the continuous expansion of the scope of trade between China and Europe has also led to the rebound of the related parts and components manufacturing industry. From this perspective, trade Behind the recovery is the recovery of the real economy, especially the strong drive for the recovery of the manufacturing and capital goods trade.
The WTO’s report on the world’s first three quarters of the business climate index shows that despite such a strong rebound in 2017, by the third quarter of 2017, both the freight container index and the air cargo volume index, as well as the growth rate of export orders index, have emerged. The slowdown also means that there may be an inflection point in the future growth of global trade.
According to our analysis of the trend of global trade recovery in 2017, the real inflection point may be exactly in 2018. The reason behind this is that we have to worry that due to the outbreak of conflict risks between China and the United States, it is possible to have a global chain reaction. Each country may have The Sino-U.S. trade war has become more involved. Therefore, we want to see more from the perspective of the global value chain. Why did the United States launch this trade war? Because Trump always took the so-called 'American deficit'. Because most of the globalization dividends were taken away by China.
But if we look at it from the point of view of the global value chain, now is not the form of traditional trade in the 1970s and 1980s. The global value chain has given a new meaning to 'local manufacturing'. We know that there are a lot of raw materials and intermediate products. The emergence of the whole global trade is more reflected in value-added trade or intermediate goods trade. Therefore, the production of products is more shifted from 'domestic manufacturing' to 'world manufacturing' or 'global manufacturing'. In the global value chain, China is global The largest intermediate goods trading country. The United States is at the high end of the global value chain. It imports less intermediate products from third countries, while China is burdened with losses from other countries, such as Japan, South Korea, and some countries in Southeast Asia. According to the full-value statistics, the intermediate products and trade deficits generated in these countries are reflected in China’s export of final products, which is reflected in China’s large surplus with the United States.
Although the WTO, UNCTAD, and OECD have been promoting 'value added trade statistics' in an attempt to improve the original statistical methods, we have seen that in the United States, especially for Trump, 2018 is Trump’s new policy on global trade. Inflection points, from the original 'transaction policy', more to 'active offensive' policies. Since World War II, the global multilateral trading framework with WTO as the main body may suffer, which is also the future we are more worried about Chained structural conflicts. If further analysis, from a Chinese perspective, China is now the world’s largest trading middleware and the world’s largest manufacturing center, particularly in machinery, electronics, and automobiles. These industries are precisely global value chains. Industry, many US trade sanctions in the 'Section 301' are also concentrated in the machinery, electronics or semiconductor chip industries. These industries are precisely because China is an important industry in the entire global value chain.
In 2017, China's total trade volume reached 4.1 trillion yuan, which exceeded that of the United States and returned to the status of the first trading entity. From the perspective of value-added trade, many of China’s products not only include domestic value added, but also include A large amount of foreign value-added. China's final products exported to foreign countries, including the added value of foreign countries is far greater than the value added, but also in the global economy accounted for the highest proportion.
From the perspective of China's trade structure, why does the '301 clause' not be confined to some traditional industries, but further shifts to high-tech or capital-intensive industries? If we look back at China's development history these years, China’s manufacturing exports It has gradually shifted from the 'common goods trade' to the 'capital goods trade' upgrade. According to our research, in 2015 China’s foreign trade exports accounted for more than 50% of the total output of electromechanical devices. Large-scale stand-alone machines and complete sets of equipment, high-speed railways, and high-end manufacturing industries accounted for half of the country’s exports. Although China’s trade structure with the United States still has great complementarities, from the perspective of trends and trends, China is moving along the entire high end of the industry chain. Labor-intensive consumer goods gradually move toward consumer electronics, machinery, and equipment. High-end precision manufacturing upgrades. From this perspective, it is bound to have a full range of conflict with the United States.
Therefore, we have seen that Trump's 'Section 301' on China is not confined to a trade war with China on the trade deficit, but these industries are precisely products or industries that are not China's trade surplus with the US. If we from the global value chain In light of changes in the global industrial structure, China’s industrial upgrading will inevitably be linked to the United States’ short soldiers. From this perspective, China must be prepared for the long-term war.
Now that Trump has released the '232 investigation', he has already incorporated many of his global trading partners under the framework of his 'trade war'. Therefore, the Sino-US trade war has not been confined to the issue of trade conflicts between the United States and the United States. Multinational corporations and consumers will have a very big impact. We see why a lot of U.S. multinational corporations still have greater willingness to promote in globalization because multinational corporations are an absolute leader in global value chains. They account for 80% of overall international trade, and for the world’s 100 largest multinational companies, their overseas operating revenue is much higher than their local operating income.
In particular, in the United States, more than 80% of the United States’ import trade actually comes from the value chain of multinational corporations. If the United States imposes high tariff penalties on Chinese intermediate products, especially mechanical products, transnational corporations in the entire industrial chain will be directly affected. In addition, in Trump's 'new tax reform bill' last year, the obvious logic was 'to make the United States stronger'. This is reflected in the return of U.S. manufacturing, the return of U.S. capital and the return of U.S. competitiveness. US Senate version The tax reform bill, patent income generated by transnational corporations abroad, and intellectual property income, impose tariffs on affiliates from other countries. For Apple, Google companies have substantial basic R&D investment in China or in other countries. The center, if the Trump Tax Reform Act is implemented, will restrict the transfer of technology to multinational companies setting up R&D centers overseas.
We expect the worst consequences. If a “U.S.-centered” trade war really breaks out and China achieves revenge, then it is inevitable that the world will be involved in such a trade war. Global value chains Any link will inevitably be affected by this kind of impact. For example, in the 'Section 301', machinery manufacturing, communication equipment and other industries are closely related to Japan and South Korea. A recent report by the Korea Modern Economic Research Institute shows that if the US team China With a 10% reduction in imports, South Korea’s exports to China are likely to decrease by 19.9%. In fact, we have a large number of intermediate goods trades and parts that come from Korea, Japan, and these countries. Therefore, these countries will bear the brunt of the '301 clause’ cashing. , It is possible that they have been hit harder than China.
According to a study we have done in these years, under the dominance of trade in intermediate goods, the trade war not only brought about a drop in Chinese exports, but in turn caused the decline in exports to bring about a decline in total aggregate demand, and the decline in imports will further increase the Taiwan, South Korea, ASEAN, and Australia will all have an impact. This is the worst scenario we may foresee in the future.
Therefore, from the perspective of policy choices, I would like to mention a few points. First, China’s trade war with the United States dates back to the trade war that took place between the United States and Japan. China should still maintain its strategic strength. It cannot be short-term. China’s long-term strategic interests will be sacrificed by peace. This is the first principle of application. The second principle, recalling that year’s Japan, is whether or not the RMB should undergo a significant appreciation of the US dollar. History has told us that the bitter lesson of the “Plaza Accord” was that If China’s currency appreciates significantly, it may have a very big impact on China’s future industry development. Third, should we not sell US Treasuries? If China takes the initiative to initiate a round of financial war, it will be our 4 trillion yuan in foreign exchange reserves or bear the brunt of it. U.S. Treasury bonds generate a lot of wealth. Fourth, considering China’s position in the global value chain, it is still necessary to unite more trading partners and global value chain partners to place Sino-U.S. trade issues on the WTO framework or on multilateral issues. Under the framework, not under the bilateral framework. Thank you all.