"The concept of economic globalization can be traced back to the 1970s, when Western countries and East Asian countries opened up their financial markets and relaxed capital controls, which together created the concept of economic globalization."
Economic globalization has led to the restructuring of global supply chains.
From the 1970s to the early 2000s, the supply chains of developed Western countries mainly shifted to countries like Japan and Korea in East Asia, and the Four Asian Tigers.
Multinational corporations achieve the goal of maximizing efficiency and profits by monitoring and coordinating factories around the world and breaking through geographical limitations through business operations.
This period saw unprecedented economic and cultural activity, bringing unprecedented prosperity to the countries of Asia.
As Japan enters its lost three decades, the economies of the former Four Asian Tigers have almost completely stagnated, and the root cause of this is not only the Asian financial crisis.
Furthermore, it is because a new behemoth—China—is about to enter the scene. Since China joined the WTO in 2001, this country, with its massive pool of well-educated and inexpensive labor, has been rapidly attracting the global relocation of manufacturing.
As a result, since 2012, although China has not participated in the annual G7 meetings, the main agenda items have always revolved around issues related to Chinese manufacturing.
China not only possesses a vast human resource base, but also increasingly complete infrastructure and cheap hydropower necessary for its manufacturing industry.
Yes, compared to other developing countries, China provides cheap and stable hydropower.
At the same time, China's advantages are not only in the aforementioned material world, but also in its unprecedented mobilization capabilities and the unparalleled will of its leaders.
A high-ranking official in China once expressed regret at a symposium that China was unable to produce ballpoint pen tips. A year later, a steel company in a certain province completed the independent research and development of ballpoint pen tips.
The powerful mobilization capability has led to China's unwillingness to remain at the bottom of the manufacturing industry; their determination and will to climb upwards are incredibly strong.
As time went on, the upward shift of China's industrial chain led Western developed countries to go from scorn to skepticism, then to observation, and finally to fear in 2018.
They cannot accept a China that occupies the upstream of the industrial chain. If this becomes a reality, then America's three legs will be cut off.
The three advantages that America has relied on to dominate the world are high-end manufacturing, finance, and military capabilities.
Military capabilities and high-end manufacturing complement each other. In a sense, China is already gradually encroaching on the mid-range manufacturing market.
This was followed by the relocation of manufacturing, with Western countries beginning to move their industries to less developed third-world countries as early as 2015 or even 2018.
Among them, America is shifting its production capacity to neighboring Mexico and Brazil, Japan and Korea are shifting their production capacity to Southeast Asian countries and India, and Western Europe is choosing Eastern Europe and Turkey.
The peak of this supply chain shift will occur between 2022 and 2024.
The problems facing China are not just about the shift in supply chains.
Because the shift of supply chains is not entirely a bad thing to some extent. China is able to capture the vast majority of the market share of mid-range supply chain products such as motors, infrastructure, and machine tools involved in the shift.
For China, the key question is how to maintain its massive production capacity after the supply chain is restructured and relocated.
Meanwhile, China's supply-side and environmental protection strategies, which began in 2015, have eliminated a large number of small and medium-sized mining enterprises, forming a new coal, steel and non-ferrous metals industry chain.
After this phase was completed, China launched a national strategy for carbon neutrality and carbon peaking, which was accompanied by a new energy industry chain.
The new energy industry chain is not limited to new energy vehicles, but also includes upstream industries such as wind power and solar energy.
This shift in overall energy strategy has led to the rapid growth of new energy-related companies in recent years.
However, the problem lies in the fact that the mid-to-downstream electric vehicle industry, in conjunction with the Internet of Things and 5G communication systems, faces constraints from high-end chips.
Although automotive chips do not require a process smaller than 14 nanometers, chip manufacturing involves more than just processes; it also includes silicon wafer materials, packaging, design software, and photoresist.
The photoresist market, with an annual revenue of only 2 billion US dollars, has spawned a company with a market value of 500 billion RMB, which is a pure market value bubble. In fact, the company's photoresist has only been recognized by domestic manufacturers in the last two years.
While China's semiconductor substitution process has created a bubble, it has also brought hope.
However, I was initially pessimistic about whether we could successfully break through the chip blockade before developed Western countries completed the restructuring of their industrial chains.
Because capital speculation outweighs investment in China, a capital market without a system to protect the rights and interests of small and medium-sized shareholders cannot achieve true value investing, let alone grow together with great companies.
Under such pessimistic expectations, if high-tech substitution fails and the supply chain is restructured by Europe and the United States in Southeast Asia and South Asia, then China will undoubtedly face the middle-income trap.
Incidentally, after the Plaza Accord was signed between America and Japan in 1985, they not only used financial means, but also launched a semiconductor trade war from 1987 to 1991.
The tactics employed included forcing Japan to cede 20 percent of its market share to American companies, forcing three of Japan's five major electronics companies to abandon the storage industry, and supporting Korea's Samsung.
The subsequent four years saw a telecommunications war that caused a prolonged slump in the Japanese stock and real estate markets. Amerikan Capital seized the opportunity to buy up assets at rock-bottom prices, gaining control of 30 percent of Japan's financial sector and 20 percent of its industrial capital.
This chapter is not finished yet. Please click on the next page to continue reading the exciting content!
Continue read on readnovelmtl.com
