recent china-us economic and trade frictions escalating the u.s. government, not only from china is firmly opposed to, will be $200 billion since may 10, were imposed on chinese imports tariff rate from 10% to 25%, and lead to china-us economic and trade consultation, moreover, the u.s. government in the name of the so-called national security "supposed", continuous several chinese companies such as huawei and some universities, research institutions under the jurisdiction of the "long arm" sanctions, also propulsion protectionism in various ways. these actions and practices of the us government are not aimed at solving the so-called trade deficit problem at all. they are simply suppressing china's development. needless to say, in the short term china's economic growth and development will be because these upgrades in america and be affected by a certain degree, however, must recognize that in today's world, the affected is not just china, and it will severely damaged under the background of economic globalization and efficient global supply chain, which is formed by the ecological industrial chain and technology innovation, and to the global economic growth, rational division of the world economy and the global pattern to meet the new industrial revolution will have adverse consequences.
one is the loss of efficiency in the global economy. the economic and trade frictions provoked and escalated by the united states will force some enterprises to adjust their global supply chain and industrial chain, which will damage the existing efficient global supply chain and industrial chain and inevitably lose the efficiency of global economy.
today's world's supply chain and industrial chain is formed under the global value chain division of labor and is the product of capital globalization supported by modern transportation technology and information technology. from an economic perspective, economic globalization is the result of the global capital profit, thanks to modern transportation technology has made the transportation cost greatly reduced, the information technology development and greatly reduce the cost of knowledge dissemination and communication, the enterprise can low cost to each specific value creation activities through the global allocation of resources to achieve, so to form the division of global value chain across the country. specifically, multinational companies in the developed countries need to own the analysis on the value chain of business functions, determine where each function implementation, how to implement in order to maximize the enterprise value, in the most efficient way in the global allocation of resources to achieve these business functions, this creates a division of global value chain. under this division of labor, the global supply chain and industrial chain are formed respectively between enterprises that realize the logistics supply and trade of enterprise value. therefore, the current global value chain division of labor and the resulting supply chain and industrial chain layout is determined by this long-term market competition is an efficient production mode. although due to the multinational companies in the developed countries dominate the global division of labor, the developed countries, generally in the value chain of high-end, low-end late-development country generally in a value chain, but all countries involved in the global value chain division of labor and got interests of enterprises, realize the win-win situation, the former profit and growth, the latter obtain employment and development, so that all parties actively accept the division of global value chain. this is also an important reason why economic globalization based on the division of labor in global value chains is unstoppable. of course, in market competition, supply chain, industry chain and value chain can cause positive change due to technological progress gradually, for example, the late-development country enterprise rely on technological innovation gradually rising along the value chain from low-end to high-end, but this kind of change from the perspective of the global economic growth must be based on the technology innovation, and gradually improve the economic efficiency, otherwise it is not possible.
however, when a country government by imposing tariffs on various grounds, directly restricting enterprise multinational management behavior, with domestic legal intervention in the international production activities, will inevitably raise the cost of corporate transactions, enterprise's value chain have to be redesigned, forcing firms to break the existing global supply chain and industrial layout, and disrupt the global economic order, undermine the market competition system, distorting global allocation of resources, caused enormous losses, and eventually lead to the global economic efficiency to participate in any country in the global value chain and enterprise are not good.
as paul krugman, a nobel prize-winning economist, has pointed out, the way the us is doing things can easily lead to the fragmentation of the global trading system, resulting in a rapid and damaging decline in global trade. in fact, what the us government needs to understand is that the division of labor in global value chains formed since the end of world war ii and the global economic governance architecture represented by the wto, imf and world bank have benefited the whole world and are global public goods. the world economy is not a game that only surplus countries can win. in today's economic globalization, disrupting the global supply chain and industrial chain layout will harm the interests of everyone.
second, the loss of american corporate self-interest. the existing global value chain division of labor, supply chain and industrial chain layout is dominated by developed countries, especially american multinational companies, and the corresponding interests are the largest. the trade friction provoked by the us government will destroy the existing supply chain and industrial chain layout, and also lead to the huge loss of american multinational companies' own interests.
the u.s. government has been on china's trade surplus, however, it is important to recognize that these surpluses, the united states contributed much of investment in china enterprises, these enterprises also get big profits in china, since 2007, the foreign investment in china income rising for years, nearly four times the cumulative growth, in 2017 the foreign investment in china is more than $280 billion. the trade war initiated by the united states against china will not only have a negative impact on chinese enterprises and economy, but also inevitably cause huge losses to the interests of american companies. on the one hand, the imposition of tariffs will have a direct impact on the business activities and profits of american companies. on the other hand, for american companies, the imposition of tariffs and sanctions on chinese companies will artificially increase their supply chain costs and affect the stability and security of the supply chain. some companies are forced to adjust the global distribution of their supply chains, and their costs will continue to increase. at the same time, china is the only country capable of producing all products in the united nations industrial catalogue, and has a complete modern industrial system, which makes china's complete industrial supporting system and deep integration with global value chain status difficult to be replaced by other countries in the short term. for us companies, getting rid of their dependence on china's supply chain will cost a lot and result in a huge loss of profits.
for china, its participation in gvcs does provide opportunities for development, but it also involves great efforts and costs due to its position at the middle and low end of the value chain. over the past 40 years of reform and opening up, china's rapid development has been accompanied by great pains of economic restructuring. needless to say, china, like other latecomers, is trying to find a path to industrial upgrading, hoping to overcome the "middle-income trap" after economic take-off, which is the undisputed right of any country to develop. further, it is china's development that has lifted 850 million people out of poverty, brought stability to world development and brought tremendous progress to human society. by contrast, the united states while enjoy the huge benefits of economic globalization, due to the domestic social contradictions and unfair distribution and a series of problems that cannot be coordination, to blame china exist such as unfair trade practices, the logic is: i should benefit from the global value chain division, and you benefit from the global value chain division of labor is not fair, i'm going to start a trade war unilaterally. this is typical bullying logic.
third, the loss of new drivers of global growth. the us sanctions against huawei and other chinese high-tech enterprises and a series of technology protectionism measures have seriously damaged the global open and cooperative technology innovation ecology, and will undermine the cultivation of new drivers of economic growth in the context of the global new industrial revolution.
today, for human society to digital, intelligent and network into a core characteristics of a new round of industrial revolution, more efficient, safe, reliable and stable 5 g information network will be one of the major infrastructure, artificial intelligence, big data and cloud computing, information technology and the product is to speed up the breakthrough and large-scale commercial applications, new technology, new models, new forms and new industry is booming, all these constitute the main engine of global growth in the future. in the wake of the international financial crisis, global economic growth has entered a "new mediocrity". the new industrial revolution provides an opportunity for the global economy to regain its momentum. of course, the new industrial revolution will also bring a series of challenges to human society. against this background, it is imperative for all countries to deepen cooperation, expand openness, and make joint innovations to meet the opportunities and challenges brought by the new industrial revolution to mankind. modern economics shows that, due to the complexity of innovation activities, the essence of improving innovation ability is to form a perfect innovation ecosystem. "innovation ecosystem" is a dynamic and natural system featuring co-prosperity, innovation, co-evolution, dynamic openness and other features of complexity, dynamics, systematicness, synergy and openness. the improvement of a country's technological innovation capability requires not only an increase in the number of r&d funds, personnel input and other elements, but also an adequate, open and continuous interaction between innovation elements and between innovation elements, system and environment. building an open and cooperative innovation ecology is undoubtedly of great significance to the world economic development under the background of the new industrial revolution.
in recent years, china has implemented an innovation-oriented national strategy and strengthened ipr protection, further enhancing its innovation capacity. unlike previous industrial revolutions when china was poor and weak, china today has the foundation to join the rest of the world in welcoming the new industrial revolution. especially in the fields of high-speed railway, 5g, artificial intelligence and mobile payment, china enjoys a huge market scale and has good cooperation space with developed countries in technological innovation. for china and the united states, the future space, climate, health care, energy, artificial intelligence and other areas of technical cooperation is huge.
against this background, the us sanctions chinese high-tech enterprises under various excuses and adopts various measures to implement technology protectionism. the essence is to suppress china's development. however, this has greatly undermined the technological innovation ecology of world openness and cooperation. it is not conducive to mankind's efforts to embrace the new industrial revolution, nor is it conducive to the cultivation of new drivers of world economic growth. and its goal of suppressing china's development will not succeed. it will only encourage china to cooperate with other countries to continuously improve its technological innovation capacity.
source: economic daily