Why does the United States make a strong return to China?

It is reported that the United States will withdraw nearly 40% of its factories from China to the United States. Whether it is true or not, it is a bad news for Chinese manufacturing. The United States has made a strong return. Where will China's manufacturing industry go?

The first driving force for China’s rapid growth has been the population factor. The huge labor force created by the huge population base has attracted many foreign companies to invest in factories in China. It not only provides sufficient labor supply for economic growth, but also creates conditions for high accumulation rate and huge capital investment. Under various favorable conditions, the marginal rate of return on capital invested in China is generally higher than that of developed countries, and global productive capital continues to flow into China. However, as the favorable advantages of the population disappeared, the labor cost gap between the two industries in China and the United States quickly narrowed. Coupled with the consideration of shipping costs and various hidden costs and supply chain costs, China’s overall cost advantage will be minimal. Of course, the labor force is not the only factor that changes China's competitiveness. China's factor prices are generally rising.

In addition to the gradual narrowing of the cost gap, more may come from the challenges of innovation and technology. The United States vowed to remain at the forefront of high-end manufacturing, and make good technical reserves for the new industrial revolution. In the past two years, the government’s R&D budget has not been reduced despite the difficulties in the economic fundamentals of the United States. High-end manufacturing is the core goal of the United States' "reindustrialization" strategy. The United States has officially launched a high-end manufacturing program and is actively strengthening research and development in such fields as nanotechnology, high-end batteries, energy materials, bio-manufacturing, next-generation microelectronics R&D, and high-end robots. Promote the development of high-end talent, high-end elements, and high-end innovation clusters in the United States, and maintain leadership in research and development, technology leadership, and manufacturing leadership in high-end manufacturing.

Judging from the current status quo, the return of industrial capital in the United States has become a major trend. For Chinese manufacturing industry, it is necessary to regard revitalizing China's manufacturing industry as the core of China’s long-term economic strategy, and it must not lose its cost advantage. Of course, we must continue to carry out scientific and technological innovation and train more professionals to prevent the loss of technology costs.