The dividends introduced into the market economy in 45 years may disappear.
The times are changing, and we also need to change.
This is the biggest change in the scale in the history of globalization.
With the rise of trade protectionism in the West, not only the West, but also many Latin American countries have begun to follow the example of the United States and Europe in the past few weeks to impose higher tariffs on imported Chinese goods, which has made us, who benefited most from globalization in the past, encounter the biggest change in a century.
Mexico, Chile and Brazil have successively raised tariffs on China's steel products, and in some cases even more than doubled them; In addition, Colombia may take similar measures.
And we, no doubt, have become the main victims of this round of western trade protectionism.
Now, we have made one third of the world's industrial products. With the rise of global trade protectionism, for us, goods cannot be sold, or the higher the cost of selling, the greater our losses and costs.
If we are isolated, we may lose the economic achievements of more than 40 years.
This is not alarmist.
Today, the restructuring of the global free trade system is being reshaped with the "Friendly Shore Outsourcing" proposed by US Treasury Secretary Yellen, and this round of reshaping is showing signs of "de Chinesization".
As the world's factory with the most comprehensive production categories, this trend is by no means a good thing for our employment, macro-economy, and even global consumers.
Since the United States announced on May 14 to raise tariffs on electric vehicles in China, Canada has recently indicated that it has considered following up on this measure. Germany will soon decide whether to disable 5G communication equipment in China.
Although the US tariff increase this time is of little practical significance, covering only US $18 billion of goods, even if it is symbolic, it has attracted many Western countries to follow suit.
On May 18, Canadian Trade Minister Wu Fengyi said that he was "studying very carefully" the imposition of tariffs similar to those of the United States on Chinese electric vehicles. At present, Canada's tariffs on Chinese electric vehicles are only 6%, while the United States's tariffs are 100%. Once Canada follows up, it almost means that we lose a market again.
Not only Canada, but also the Ministry of Foreign Affairs and the Ministry of Economy of Germany also supported the proposal of the Ministry of the Interior to prepare to dismantle Huawei and ZTE equipment based on security considerations.
Germany has always been regarded as a friendly country to China in the EU on trade issues; If Germany starts to do the same, then some problems may really become a consensus.
No matter whether this difference really exists, who is right and who is wrong, once the consensus starts to gather and we start to be isolated by trade, it will undoubtedly be a huge blow to us.
We benefit from globalization, deepen our efforts in globalization, and benefit from the current world order. Once the supply chain begins to de sinicize, it will cost us no less than the biggest defeat in more than 40 years.
This is the largest global trade protection against China in history; Even when Japan's economy was booming, only Japan and the United States had the most trade frictions.
This time, the coverage and the number of participating countries were far greater than the trade friction between Japan and the United States at that time.
The trade protection measures taken by various countries against China also show that China is increasingly becoming the target of criticism on the issue of export subsidies, and the international situation has become more isolated.
The President of the United States recently pointed out that China's market for technology approach forces enterprises to transfer key intellectual property rights, which violates the principle of fairness and reciprocity in free trade.
While China has repeatedly stressed that Europe and the United States' protectionism against China's electric vehicles and other clean energy is not conducive to environmental protection, it is obvious that this is not very convincing.
This is a fundamental difference between the two sides.
From the inclusiveness of globalization to our country in the past, today it is no longer so "inclusive". Behind it is the expansion of security and risks, as well as a fundamental change in our views. The world has become more right, which is obviously not a good thing for us.
On May 16, the International Monetary Fund criticized the United States for sharply increasing tariffs on China, which would harm global trade and economic growth. The global free trade system has not been completely reversed, but has been restructured.
Why can the West have the ability to reorganize globalization, but we can only passively accept it?
The underlying reason is that globalization plays different roles; Our role is more of a producer and a supplier. Every year, we produce a large number of goods for export to the European and American markets. The reason why Europe and the United States have the ability to reshape globalization is that their terrible consumption capacity is the biggest reliance.
Whoever has the money and the ability to consume will have the discourse weight to shape the supply side.
With the de sinicization of European and American supply chains, more and more medium-sized developing countries are winning.
Last year, driven by the outsourcing trend of Yellen Friendly Bank, Mexico replaced China as the largest commodity exporter of the United States. Vietnam has also benefited from this. Last year, its trade surplus with the United States was close to 105 billion dollars. In the ranking of the United States trade deficit countries, Vietnam is only behind China, Mexico and the European Union.
Why does the principle of global free trade evolve into what Yellen calls "friendly offshore outsourcing" today?
The rise of pure trade protectionism cannot fully explain this phenomenon.
Economic data show that free trade can indeed improve the well-being of all mankind. From 1990 to 2010, the number of people living in extreme poverty in the world was reduced by half because of the improvement of living standards through free trade, and 1 billion people were lifted out of absolute poverty.
We have also benefited from this. Since China's accession to the WTO in 2001, hundreds of millions of people in China have pleaded for absolute poverty. In 2001, China's per capita GDP was only 1000 dollars. By 2019, China's per capita GDP exceeded 10000 dollars. In a short period of less than two decades, China's per capita GDP has increased ten times, which is a huge economic miracle.
And behind this, we can't do without a globalized free trade system.
Therefore, it is no exaggeration to say that we are the biggest beneficiaries of globalization.
But the free trade of globalization, in a sense, will also be restricted; Trump launched a trade war against China in 2018. According to the US think tank report in 2019, the trade war in 2018 cost US consumers and producers 51 billion dollars. For us, the loss will certainly be greater.
The final cost of levying tariffs must be paid by both parties, namely, American consumers and Chinese producers, while the conflict between Russia and Ukraine and COVID-19 expanded this again.
The fundamental differences in values between the two sides have also strained our economic and trade relations with Europe and the United States again.
Today, the EU has begun a new round of tit for tat anti-dumping investigations. If not effectively controlled, it is likely to escalate into a comprehensive trade war.
In this world, there is no more important economic and trade relationship than Europe and the United States.
Although the trade volume between China and Russia increased to 240 billion US dollars last year, considering that Russia's per capita GDP is not as high as ours, their consumption capacity is extremely effective. The trade volume of 240 billion US dollars has hit a new high between China and Russia, but the EU alone has a trade volume of 780 billion US dollars.
Therefore, markets like Russia obviously cannot replace the importance of western markets to China.
We should have reason to have good relations with those who contribute more jobs and economic income to us, which is the basic principle of market economy.
Today, the liberalized global trade system has been impacted by Russia and Ukraine, and security has become more and more important than economy, which also leads us to face greater possibility of isolation in the international market.
The increasing negative sense of western public opinion and public opinion towards us may further aggravate the differentiation and fragmentation of the existing trade pattern. For us, if the worst happens, Europe and the United States impose tariffs on our entire industry, then who should our goods be sold to?
The world is far away from our big market with more than one billion people. Doesn't it look like it will change?
In fact, this is not necessarily the case. When we did not introduce the market economy decades ago, our position in globalization has always been missing, but the globalization of the world has still not stopped.
Now, once again in the past few decades, everything has become more and more uncontrollable. If we are really isolated by the globalization led by Europe and the United States, then we are likely to fall into a dilemma, and the market economic dividend of 45 years is bound to disappear, which is a very unfavorable situation for us.
There is not much time left for us.
US Treasury Secretary Yellen said on May 21 that US and European leaders must solve the problem of China's industrial subsidies, because China's industrial subsidies pose a threat to the global clean energy industry.
Yellen said in a speech in Frankfurt, "At present, China's industrial production capacity has led to the production greatly exceeding the global demand for key industries such as electric vehicles, lithium-ion batteries and solar energy."
Yellen said: "We have seen this before. More than a decade ago, their large-scale support led to low steel costs, flooded the global market, and destroyed industries around the world and the United States. Biden will not accept this reality again."
Finally, Yellen said:“ We hope to see healthy green technology industries in the United States, Europe and around the world, from innovative start-ups to green manufacturing plants, not just in China. ”
I think that these words are very representative of the final outcome that European and American trade protectionism forces want.
That is, the decentralization and diversification of the global supply chain is no longer the pattern of the world factory with China as the center in the past. For us, this pattern change may not be fully prepared.
From the world factory to the fragmentation of globalization, are we really ready?
Obviously, we haven't.
This is not the first time in our history that we have been isolated, but we hope this is the last time in history.
end.
Author: Luo Sir, an optimistic pessimist who cares about the economy, society and everything in our world, wonders about the logic behind the development of things.
