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People'S Daily: Insist On Promoting The Transformation And Upgrading Of Traditional Industries, Not Simply Exit As A "Low-End Industry"

2023/5/17 19:32:00 0

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The front page headline of the People's Daily published on May 6 published the contents of the "First Meeting of the 20th Central Finance and Economics Commission", in which the most impressive sentence was "adhere to promoting the transformation and upgrading of traditional industries, and cannot simply exit as a" low-end industry "

Traditional industry ≠ low-end industry

For a period of time, traditional industries have become the role of "grandma doesn't care, uncle doesn't love". The government has eliminated "backward production capacity" through environmental protection, taxation, relocation and other means, and is committed to developing the new economy and modern service industry. But without traditional industries and traditional manufacturing, the service industry is water without a source and wood without roots.

The most terrible thing about reducing the pain of traditional industries is that "the old has gone, the new has not come".

In recent years, with the increase of human costs in China and the increase of environmental protection costs caused by the tightening of environmental protection policies, the production costs of traditional industries such as textiles continue to rise, and the profit space is severely compressed. Enterprises are constantly transferring factories or production capacity to Vietnam, Cambodia, Myanmar and other countries in Southeast Asia or Africa with lower labor costs to ensure a sustainable and considerable source of profits. Under this trend, the production situation of the domestic textile industry is declining.

In fact, "traditional industry" is not equal to "low-end industry". In Zhejiang, where the traditional manufacturing industry accounts for half of the real economy, it has long been a consensus among the people, and it is also a long-term practice.

The separation of low-end and high-end will lead to hollowing out of industry

Now there is a view that low-end industries must be eliminated for industrial upgrading, and there is no need to worry about the transfer of "low-end industries" to Southeast Asia. Everyone is used to listening to industrial upgrading and telling stories about global industrial transfer.

For example, deindustrialization has led to the transfer of some industries and links from Europe and the United States to the four small Asian dragon countries to establish production bases, and then labor-intensive industries are transferred to other developing countries such as China.

Those who hold this view like to take the example of developed countries. They chose to retain the high-end chain in the industrial chain, that is, the links with high technology intensity, high product value appreciation and rich profits, and realized the upgrading of the industrial structure. However, in recent decades, the side effect of Europe and the United States in eliminating backward industries has also gradually expanded, that is, "industry hollowing out". As reflected in the data, the output, added value and employment of the manufacturing industry have declined.

After finding the problem of "industry hollowing out", the United States changed its strategy in time to seek the return of manufacturing industry.

In recent years, the United States has continuously introduced various policies, such as the Inflation Reduction Act and the Chip Act, to attract high-end industries such as "new energy vehicles" and "chips" back to the United States.

What the United States seeks is for all manufacturing industries to return to the United States, not only the so-called "high-end industries", but also the so-called "low-end industries".

According to the report of Kearney's American Manufacturing Industry Reflux Index, according to the survey of American manufacturing executives and CEOs, more than 80% of enterprises in almost all industries have formulated strategies to return at least some of their manufacturing businesses in the next three years.

Note that after investigating all industries, more than 80% of enterprises plan to return or are returning to the United States.

These industries are not only high-end industries, but also some so-called "low-end industries", such as food and beverage, clothing and textiles, furniture, toys, etc.

Traditional industry concerns safety

The "low-end industry" in the eyes of many people is the manufacturing industry for mass consumption, such as textile industry, clothing, leather, furniture, etc.

In a society full of "high-end industries", under the macro prosperity, large-scale micro individuals must be unemployed. If the industrial upgrading is carried out without much change in the economic scale, and all of them are made into unmanned chemical plants, how can we deal with the employment of 95% of the remaining people?

For example, masks should not be considered as a high-end industry. They not only have low unit prices, but also have low industrial added value. But can the mask industry chain be eliminated? Definitely not. During the epidemic period, it was because we had the most complete mask industry chain and supply chain that we were able to build a huge mask production capacity in a short time, which greatly helped us through the difficult period. If we eliminate the mask industry early, we may have to pay several times the price in the past three years.

Now, in some regions that claim to eliminate "low-end industries" and transform and upgrade, there are gaps in the industry. "low-end industries" have been driven away, and "high-end industries" have not developed. In order to maintain economic growth, we can only continue to borrow money for development. Now, debt is unsustainable and on the verge of explosion.

Therefore, we must pay attention to the relocation of manufacturing industry. The upgrading of manufacturing industry is absolutely a good thing, but we are far from eliminating the so-called "low-end manufacturing industry".