What is the impact of the return of U.S. manufacturing and increased global investment?
After the issuance of the U.S. Declaration of Independence in 1776, after more than 100 years of development, the United States has become a world manufacturing power. However, with China's reform and opening up, China has also achieved rapid rise with the development of manufacturing.
In 1900, the United States became the world's most powerful industrial power, accounting for 30% of the world's total industrial output, and the proportion of manufacturing was as high as 236%。Today, however, the share of total industrial output in the United States has fallen to 1811%, and the proportion of manufacturing also fell to 1115%, the U.S. manufacturing sector is in decline.
In contrast, China has increased its manufacturing share to 30% after decades of development, and in 2021 it surpassed the United States. Therefore, the United States began to pay attention to the development of manufacturing, and countries have also increased investment in the United States, and the American manufacturing industry has also shown signs of return.
But, in fact, it is not that simple, what is hidden behind all this? Next, we'll dive in**.
The pace of reshoring of U.S. manufacturing is impressive, but the truth behind it is not simple. South Korea's chaebol and Germany's Volkswagen Group have invested in the United States, of which LG Energy has invested 17 trillion won to build a plant, Hyundai Motor invested 55$400 million to build an electric vehicle plant, and SK hynix is also investing $1 billion to build an R&D center in Silicon Valley.
These investments have brought South Korea's chaebol to $27.5 billion in the United States last year, which seems to be the outcome that the United States wants to see, and even regain market share in the manufacturing sector.
So, will these investments really revive the U.S. manufacturing sector? After countries increase investment, will there really be signs of recovery in the U.S. manufacturing industry?
The United States was once the world's largest manufacturer, but for the sake of immediate profits, they ceded the low-to-mid market to China, Japan, South Korea and Southeast Asian countries, while they monopolized the high-end market and core technology in the field of technology.
They want us to take all the hard work and toil in exchange for a small gain, while they use cutting-edge technology to make good profits. However, to the surprise of the United States, China has not only successfully mastered the dominance of the low-end market, but is also marching towards the high-end market.
Once China makes a major breakthrough in the high-end manufacturing market and takes the lead, the United States may not even be able to drink the soup. Therefore, the United States is now actively promoting the reshoring of manufacturing, the core of which is to re-recognize the importance of manufacturing.
The United States** has sent invitations to large companies in various countries to set up factories in the United States, especially in the field of chip manufacturing. The three most lucrative industries in the United States are oil, airplanes, and chips.
The United States invited TSMC to build a factory in the United States in order to improve the local chip industry chain and successfully grasp the market share of high-end chip manufacturing. When TSMC held the first factory relocation ceremony in the United States, Biden personally appeared and claimed that the United States would be great again, which shows how much importance the United States attaches to the reshoring of manufacturing.
Especially when TSMC announced that it would invest $12 billion in the United States to build a new second factory, the United States** was even happier. U.S. manufacturing is starting to buzz again.
Why does the U.S. attach so much importance to reshoring manufacturing? We'll explain that later.
The number of robots invested in the U.S. manufacturing sector reached an unprecedented 1More than 20,000 units, more than the total for the whole of 2021.
This shows that the United States is going all out to develop manufacturing in an effort to regain lost market share. In order to achieve this goal, the United States has even introduced huge subsidy measures such as the Chips Act and the Inflation Reduction Act to attract manufacturing giants from various countries to invest in the United States.
Both Germany's BMW and Volkswagen Group, as well as other German private companies, have invested heavily in the United States, raising concerns about changes in the manufacturing landscape in Europe.
So, have the huge investments in the United States by these countries restored the American manufacturing industry to its former glory?
Despite the large amount of investment in the U.S. manufacturing sector, it has not recovered this year, but has contracted, and the services sector has not been spared. According to the latest report from Global Economy, the U.S. economy showed clear signs of slowing down at the end of last year.
While the labor market remains stable, the consumer market, which accounts for two-thirds of GDP, is also weak, especially in the manufacturing sector. New York**Thursday is even more**.
Data released by the Federal Reserve also showed that the decline in manufacturing output dragged down U.S. industrial output, which fell by 01%, and in November, it fell by 02%。
Therefore, although the reshoring of manufacturing is a fact, it has not allowed the rise of American manufacturing. From the perspective of the three stages of development of the U.S. manufacturing industry, the U.S. has lost the gene of developing the manufacturing industry.
Therefore, it is no longer possible for the United States to return to the top through reshoring of manufacturing.
In the 70s of the last century, the U.S. manufacturing industry began to hollow out, in order to save costs, the manufacturing industry was transferred to Asia and other places, although a lot of money was saved in the early days, but in the long run, the United States will work hard to establish the industrial system chain completely removed, only focus on high-end technology research and development, and the practice and OEM work to foreign countries.
This has led to the loss of the ability to build factories in the United States, because the cost of manpower in the United States is too high, the quality of workers is not good, many Americans can not afford to work long hours, and may quit at any time, making it difficult to complete production tasks on time.
Many international companies are reluctant to leave China, which has hindered the return of U.S. manufacturing. These companies are enjoying the benefits brought by the Chinese population and labor, and no one is willing to give up in the face of huge benefits.
Taking Apple, the world's well-known mobile phone brand, as an example, more than 50% of Apple's products originate from the best manufacturers in China, Japan, South Korea and other countries, while less than half are actually produced in the United States.
In addition, most of the processing and assembly of Apple mobile phones are completed abroad, of which 90% are completed in Chinese mainland. Although the United States is trying to redevelop its manufacturing industry, many large companies are still struggling to give up the advantages of East Asia.
This is not only because East Asia has a huge advantage in labor costs, but also because the work efficiency of workers in East Asia is significantly higher than that of American workers, especially Chinese workers, whose hard-working spirit is unmatched in the world.
The United States pinned its hopes on the chip industry, expecting international chip giants such as TSMC and Intel to build factories in the United States to promote the recovery of the manufacturing industry. However, TSMC has only transferred 50% of its production capacity to the United States, and Intel does not dare to leave the Chinese market.
As a result, hopes for a reshoring of U.S. manufacturing seem slim. So, what kind of impact will this have globally and for the United States? What will be the consequences if the reshoring of U.S. manufacturing is successful?
The success of the reshoring of U.S. manufacturing seems to indicate that China's advantage in manufacturing will shrink, and even other countries, including Japan, South Korea and Southeast Asia, will face losses.
Such a situation may lead to the loss of China's status as the "world's factory", and the capital of various countries will no longer favor China, and there may even be a large-scale capital outflow.
This situation will not only lead to the collapse of a large number of enterprises in China, but also countries such as Japan, South Korea and Southeast Asia. More seriously, the failure of enterprises may lead to a large number of people losing their jobs, and the country's development will fall into a vicious circle.
Why is the U.S. so concerned about reshoring manufacturing? Because it helps to alleviate the decline of the dollar's hegemony and maintain the status of the United States as a world power. However, after the outflow of manufacturing, the United States has lost the gene of developing manufacturing, so it is almost tantamount to a pipe dream to want the manufacturing industry to return to make the United States great again.
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