According to Chinese official data, China’s total import and export volume increased by 29.2% in the first quarter of 2021, reaching 8470 billion yuan (about US $1290 billion).
According to the data released by the General Administration of Customs (GAC), exports increased by 38.7% year-on-year and imports increased by 19.3% in RMB. At the same time, according to the data of the General Administration of customs, during this period, the association of Southeast Asian Nations remains China’s largest trading partner, followed by the European Union and the United States. “
Based on the report of Xinhua news agency, let’s take another look at this problem. If a country wants to, they can make such an attempt regardless of the consequences, but they will soon find that the international economy is so closely linked that purposeful destruction of the global supply chain does not seem as easy as they think.
China has a large number of world leading manufacturers and exporters. Chinese manufacturers and traders play an important role in strengthening the supply chain and ensuring the timely supply of many products.
Chinese companies have effectively cut costs in their production lines, logistics services and maintaining stable supply for all related enterprises.
If a country chooses to advance an agenda and block trade relations with China, it will have a serious impact on them. Even if it does so unintentionally, Chinese factories operate 24 hours a day, day after day, with only some pauses during the Spring Festival.
Many ports on China’s southern, southeastern, Eastern and northeastern coastlines operate at or near full capacity most of the time. China’s railway network and roads enable manufacturers to transport large quantities of goods and materials more easily and efficiently.
The Chinese government has drawn up a road map to bring convenience to the manufacturing industry, logistics industry and commercial service industry. The construction of factories requires good roads, reliable energy, sufficient water resources and unbreakable supply chain. The efforts and achievements of the Chinese government in this regard can not be copied.
Central and local governments do their best to ensure the smooth operation of manufacturers and logistics service companies.
China has a vast territory, a large population and a vibrant economy. No country can maintain such a strong momentum of manufacturing development. Some people may say that the United States or European countries have the ability to surpass China and become a manufacturing power, but the window of opportunity has been closed.
The challenges faced by manufacturers in the United States and Europe are enormous. Land and labor costs in the United States and Europe are very high. Entrepreneurs must also consider high tax rates, strict business and environmental regulations, and the difficulties of registration and licensing. Tesla’s German factory is a lesson.
Developing countries pay so much attention to boosting consumption that they increasingly rely on Chinese manufacturers to maintain an overall low inflation rate. Chinese exporters are very successful. Without Chinese imports, the cost of daily living of people in Europe, America and even the world will rise sharply.
In addition, most of the main raw materials and parts of many products, including those manufactured in the United States or other developed countries, come from China. Rare earths used in mobile devices, smart phones, electronic devices and electric vehicles are just an example.
Therefore, restricting China’s development by banning China’s imports will kill itself. During the 2019 New Coronavirus epidemic, China’s manufacturers and exporters were not affected too much. In fact, they became stronger and their resilience remained a model of success.
1. decades ago, the United States banned the sale of weapons to China, forcing China to research and develop independently. Now, China can produce most of its own military equipment and has become the third largest arms exporter in the world.
2. The United States banned Chinese astronauts from reaching the international space station. Now, China has realized manned spaceflight and began to build its own space station.
Now, China has made it clear that all countries in the world, including the United States, are welcome to participate in China’s space station construction plan, and China has successfully sent three astronauts to China’s own Tiangong space station.
3. The United States banned American companies from exporting high-performance chips to China in order to stop building supercomputers in China. Now, the Chinese have developed their own high-performance chips, and taihuoguang supercomputer has been born.
Similarly, if the United States prohibits all trade with China, they will force China to change its export-oriented economy. It will indeed affect China’s economy, but China will certainly adapt and change accordingly. The Chinese people should thank the United States for all its prohibitions on China. The United States has given you the opportunity to create your own path.
Nothing, but all goods will become more expensive. China makes half of the world’s things. Its largest trading partner is the European Union or ASEAN, not the United States. If the United States stops importing all goods and services, the following effects will occur:
1. Once the United States achieves this goal, American consumers will be injured. For example, the manufacturing cost of iPhone is $6 in China and $60 in the United States. Therefore, the cost of living of American consumers will rise, from iPhone to plastic spoon, from toys to clothing, which will lead to substantial inflation.
2. At the same time, all traders with a keen sense of smell in Europe, Asia and Latin America will carry out arbitrage – buy goods from China, affix their own labels, resell goods to the United States and make a profit of 20%. I believe our friends in Europe and Asia will be happy to have the opportunity to make this money easily.
Imagine the construction of a global trade network. Now, the United States voluntarily closes one of its routes, which will increase the load of all other trade routes, and the transportation cost and time will increase linearly. The increase of additional cost of goods through indirect trade rather than direct trade always means the increase of additional cost.
You may think that removing China from the trade list will bring more jobs to the United States and “help” the U.S. economy. People with this logic are very wrong.
Yes, such a move will bring manufacturing jobs back to the United States, but for all those who don’t work in manufacturing? American factory workers will no doubt be happy because their income and employment prospects are now better. But for others, their daily necessities (clothes, appliances, electronic products, furniture, tools, etc.) will be much more expensive and may be many times more expensive. Therefore, in fact, such a policy will increase the income of manufacturers and reduce the disposable income of other owners.
In fact, American enterprises will also begin to be affected, because China also produces many intermediate products, such as steel, building materials, building modules and so on. If these become more expensive, the costs of producing goods, maintaining equipment and building infrastructure will rise significantly, all of which means that the employment of American workers will stagnate and economic growth will slow.
Finally, from the perspective of China, if there is no American market as an export place, it means that the income of Chinese workers will be much less, their disposable income will also be reduced, and they will deal with it by buying less goods, especially those imported from the United States, because the goods made in the United States are more expensive. In addition, there are:
• Chinese manufacturers and suppliers need to find new customers / customers in other markets (mainly Asia, Africa and South America) to replace the US market.
• as the economy gradually transforms from manufacturing to services, they also need to increase domestic consumption.
• low tech manufacturers may set up similar factories in other countries to take advantage of low-cost labor.
• if manufacturers cannot find enough customers, they must reduce or change production according to demand.
• the export volume of the United States to China is 124 billion US dollars, accounting for 7.6% of its total export volume. China will take corresponding countermeasures against the United States.
The top ten export categories of the United States to China are: grain and cotton: $15.3 billion; Aircraft and spacecraft: $13.9 billion; Vehicles: $13.2 billion; Machinery, engine and pump: $12.5 billion; Integrated circuits and microelectronic components: $12 billion; Medical and technical equipment: $7.5 billion; Plastics: US $5.1 billion; Automatic data processing equipment and its components: US $3.4 billion; Copper: $2.9 billion; Timber: $2.7 billion.
In other words, stopping trade with China is a double-edged sword. The United States will stop importing Chinese goods, but it will also greatly reduce its export potential.
You see, making economic policies is always tricky, because there is no policy that is 100% beneficial to everyone. This is always a trade-off. Are you willing to reduce the quality of life of most Americans in order to help American manufacturers? If so, do it.