New | How China can counter revitalisation of US manufacturing
He Yafei says Beijing needs a strategy to deal with the challenges created by the revitalisation of American manufacturing and the US rebalancing towards Asia that aim to curb Chinese influence
As China enters 2014 with the orderly unfolding of reforms outlined at the third plenum, the external environment is brimming with challenges, including US reindustrialisation unleashed after the global financial crisis.
The 2008 crisis hit US manufacturing especially hard. It had been the backbone of the American economy, employing about 20 per cent of the workforce before 1980. But by 2009, that had dropped to 8.9 per cent. Some American elite believe that the imbalance between the real economy and finance is a root cause of the crisis.
Moreover, they are convinced that US manufacturing has to be competitive to maintain America's global military supremacy and want to see no stone left unturned in order that the US can meet the challenge from emerging economies, in particular China.
Numerous actions have followed. From 2009 to 2012, the US unveiled various initiatives to strengthen this sector, including a campaign to "buy American" and goals to double exports in five years and promote domestic employment. The re-industrialisation strategy has thus taken shape and real progress been made to fill the "hollowing out" of US manufacturing.
Restructuring has raised production and, over the past two years, two-thirds of major US manufacturers have moved their factories back either state-side or to countries in America's neighbourhood.
This has contributed to economic recovery and a boost in employment. From 2010 to the middle of 2012, some 489,000 manufacturing jobs were added, as unemployment fell from nearly 10 per cent to about 8 per cent. In 2012, US real economic growth was at 2.2 per cent while manufacturing grew by 6.2 per cent.