“In any case, I think the heyday of the global value chain has come to an end and it is impossible to further deepen or subdivide the industries in the current environment; only redistribution, integration of regionalization and localization will have room. The global value chain will shrink to a distributed network and operate in the trend of decline of the entire network functions.So it can be assumed that after more than two years of investigation, the competitive strategy of the United States against China has started to take shape and strike effectively through the combination of modules, creating a strong anti-China aggregation and containment.As for China, if normal production cannot be resumed immediately, and the strategy of further opening up is further adopted, then the our external circulation will encounter major problems, which in turn will affect the circus internal action".
di Nicola Iuvinale
Professor Yu Nanping of the School of Politics and International Relations of East China Normal University, in his speech by video conference at the meeting on "Current News: The International Economic Situation and Its Impact on My Country", said the containment action of the United States begins to effectively hit the Beijing economy.
The Russo-Ukrainian conflict is an important historical event in modern history.
The outcome of this incident will affect all aspects: for example, after the United States and Western groups imposed sanctions on Russia, the global supply chain was affected, which had an impact on rising costs.
Furthermore, explains Yu Nanping, another level of influence it produces is that the world increasingly tends to develop in the direction of collectivization.
Originally, the global value chain was developed in the form of the "global structure of the Internet" where each country is a node; but now it could become a "distributed Internet".
"Collectivization refers to the circulation of several distributed local networks. Currently, there is a tendency to separate from each other, but the overall division of the global value chain is still a slow process."
From the point of view of production and manufacturing, the sudden outbreak of the epidemic actually gave China a window of more than two years and allowed Beijing to export to the United States; especially last year in the United States, Europe and ASEAN exports grew very rapidly.
The reason is that the US has been hindered industrially in the process of building alliances and cutting value chains. Nanping argues that the United States has the capital and technology to restore the manufacturing side, but lacks adequate manpower, "so it is obviously impossible to sustain the manufacturing industry in the short term."
"Over the years, the structure of the educational offer in the US labor market has degraded and, therefore, is no longer suitable for the development of the manufacturing industry and there is a shortage of professionally trained workers. Therefore, the United States is trying to find alternatives to Chinese growing areas in the world, and India should have been their first choice but India has also been affected by the epidemic in the past two years, with continuous twists and turns.Although India has a large population, its industrial production system is still being finalized, giving China a period of protection of more than two years."
From the point of view of the global financial market, the excessive issuance of US dollars, including the freezing of Russian assets, has caused a certain crisis of confidence in the US dollar, but the dollar index is still rising and is currently at a high level above 100, while other major currencies are declining.
"The financial market believes that there is still no better asset than the US dollar in the world. The Russo-Ukrainian war has further promoted the security hedge function of the dollar and contributed to its strength."
From the point of view of public opinion, the West clearly believes that China and Russia are a group or a quasi-group.
"The reason is that there is a de facto economic basis between China and Russia, which made Russia dare to take such bold actions."
"Setting aside for the moment the historical roots of the Ukrainian crisis, the West has by now formed a common idea of 'political correctness': not sanctioning Russia is politically incorrect. To sanction it, a modest sacrifice must be made".
The current political situation plans to put security first and the economy second.
For example, in the beginning, Germany has repeatedly said that it cannot cut off Russia's energy supply, but now it has changed its attitude and decided that it can be cut off, but it will take time and coordination between countries.
“Of course, in this crisis, the EU as a whole has borne the brunt of the cost of sanctioning Russia, be it political, economic and security. While the euro has weakened significantly, Europe has also faced it with calm.
From an energy supply point of view, the main problem facing the world today is the structural imbalance of energy. It is obviously unrealistic for the West to provide so much energy to fill Russia's supply gap in the short term. Even if the United States steps up its liquefied natural gas extraction or finds alternatives elsewhere, such as the Middle East, it will take time. But under the pressure of political correctness, Westerners find it acceptable to pay the price.
“In this case, new variables have appeared in this global value chain, especially referring to the fact that Europe has unconsciously classified us in another field. In pursuit of building the new energy industry chain in Europe, it has not particularly strengthened cooperation with Chinese companies".
From the point of view of strategic competition, the United States is currently reevaluating its Indo-Pacific strategy.
"I think the United States is making a breakthrough in the management of the Indo-Pacific strategy. As for ASEAN, it is certainly not willing to lose both sides' markets. From the point of view of market structure, China and ASEAN are in a competitive relationship in competing for the US market, which has a mutual substitution effect.From the point of view of the industrial chain, China and ASEAN have a certain upstream and downstream relationship, investment, equipment and accessories. On the one hand, both China and ASEAN have complex nested relationships. The current shift of the United States is also very clear. The high production expectations for India may temporarily fail. Therefore, the United States must grasp the time to conquer ASEAN, the most important of which is the launch of the Indo-Pacific Quad.In the original strategic framework, the US excluded South Korea.Recently, Biden visited the South Korea and Japan, hoping to build a close relationship. South Korea's current political orientation appears to be relatively pro-American and hopes to adopt a relatively tough attitude towards North Korea. In this context, the United States will certainly seize this opportunity to gradually expand the Indo-Pacific economic framework and strengthen its economic base in the region; this can be seen as the picture redesigned by the United States after the TPP. From a strategic point of view, the United States has relatively long-term plans, although the results of the operation of this framework depend on the future. However, I think the US has changed its strategy and adopted a modular strategy instead of an integrated multilateral strategy."
The concept of modularity can be understood as follows: similar to the structure of the Android operating system, the overall architecture of this operating system is designed by the United States, and various application software in it can be combined flexibly as long as it meets the operating standards of the United States. Or, from the perspective of the global value chain, the US can orient the manufacturing industry towards Asia through the Indo-Pacific economic framework, and the part that India cannot afford can be supported by the sub-structure of the countries of the ASEAN.
The role of the ASEAN countries is obviously different. From a global perspective, Singapore has now become the most favorable region for finance, capital, research and technological development. In the future, a large number of R&D centers and even the Asia-Pacific headquarters may move to Singapore. However, Singapore cannot afford so many manufacturing industries and its influence is only reflected in finance, service industries and high-end R&D.
Then, in the future, it could benefit Vietnam more, with a large population and right in the period of growing industrialization, so it could become the valley of Japan and South Korea in the Indo-Pacific strategic economic framework, accepting a large number of orders from United States. The situation in Vietnam can also be copied in other countries participating in the Indo-Pacific economic framework.
In terms of market scope and space, many of the products currently sold in the US market come from countries with low levels of production such as Honduras and Peru. From the point of view of the garment industry, the level is still far from that of China, but the United States would prefer to reduce quality and disperse procurement.
The global value chain itself was cut with an ideological background.
“Global production includes the origin of raw materials, the producing country and the consuming country. From a raw materials point of view, both the US and the European Union want to completely oust Russia from the global energy market. Russia can supply its friends, but the Western world does not accept Russia. Therefore, in the future, the energy supply chain will be regionally fragmented and global manufactured products may face price increases."
This is the market structure of the ideological background.
“I think the Indo-Pacific economic picture is the expansion of the market space after the United States turned to the Indo-Pacific strategy. From a more pessimistic point of view, if future globalization is to be conducted according to two ecosystems, then the middle zone or the intersection zone will take place in Southeast Asia."
From the experience of the Cold War, the scope and space of the market is very important. During the Cold War between the United States and the Soviet Union, Russia and the eastern former Soviet Union had a population of over 300 million people. However, Europe and the United States, together with the Asian and American markets under their control, have populations of over one billion and there is a domestic market recycling at a volume level of about 1:4.
“Therefore, the results of the game and competition are obvious: the larger the market space, the more R&D opportunities provided for technological progress, and the more effective the system cycle will be. Therefore, the competition between the future framework the Indo-Pacific economy and our focus on market space and scale is the real core issue."
From the point of view of the geopolitical situation, the United States has obviously neglected ASEAN in the past two years in promoting the "Indo-Pacific Strategy". Now that the ASEAN-US Special Summit has just concluded, the United States has set aside $150 million to allow ASEAN countries to discuss how to cooperate. While this amount was ridiculed by many national commentators, it was believed that it would not make a big catch.
"But we must not forget that the real temptation of the United States lies in its large domestic market and strong purchasing power, and of course in capital and technology."
For ASEAN countries, it is a matter of choosing a path.
Many people in the country currently despise Biden's team, thinking they won't have a clear strategy. But in reality, the current Biden team is not weak in strategic planning and execution; its modular strategic operations have also begun to mature. For example, Australia and Canada are not afraid to break with China, so they choose the political and security module; Japan and South Korea are technologically strong, so they participate in the technical cooperation module; Vietnam, Malaysia, Thailand, etc. they need markets and don't want to offend China, so they choose the economic module: the US does not require all countries to take political sides. Therefore, from the point of view of the structure of the future value chain, this is a very effective and lethal approach for China.
On the other hand, the EU is trying to promote strategic autonomy and wants to build its future competitive high-end industrial chain. This time, seizing the opportunity of the Russia-Ukraine conflict, he combined the two-way goal of reducing carbon emissions with the EU's energy independence. Recently, the European Union released a new round of plans for solar energy, including increased investment in offshore wind energy. A "forced labor" clause has been added in the design of this industrial chain, and its purpose is to allude to Xinjiang of China, because Xinjiang produces a large number of solar silicon wafers, and is also a relatively large production base for solar accessories in china .
And it obviously remains to be seen whether the EU will still have some degree of reservations about Xinjiang products.
But in any case, I think the heyday of the global value chain has come to an end and it is impossible to further dig into or subdivide the industries in the current environment; only redistribution, integration of regionalization and localization will have space. The global value chain will shrink to a distributed network and operate on the trend of decline of the entire network's functions.
It is worth noting that in this Russia-Ukraine conflict, the United States and the West have jointly attacked Russia's energy value chain, trying to block its network node in the global energy value chain and banning Russia's sales ; a new method with great lethality.
"Therefore, judging from the current reality, the impact of repeated epidemics has greatly increased the pressure we face. The spread of the domestic epidemic, including the impact of the Shanghai epidemic, has hit the whole economy hardest on the consumption power of low- and middle-level people. Many small and medium-sized manufacturing and service enterprises closed during the epidemic. The process of reconstruction and recovery will take time and trust. Now relying solely on domestic infrastructure construction, although it may increase a part of GDP, cannot improve the essential driving force of consumption. At present, loans have also fallen sharply. Observation is required to work or spend optimistically. Realistically, it is quite difficult to resume work and production in a circuit closed, which is a great test case for the internal economic cycle.The functioning of the industrial chain ale and the supply chain is completely different from that of teaching: for example, if you cannot attend classes today for particular reasons, you can tell academic affairs to adjust the timetable, which will not affect anything. But the production process cannot be stopped for a minute and cannot be missed. Therefore, the production disruption due to the epidemic is still relatively serious. Orders from overseas won't wait for others; At present, some orders have begun to move rapidly to Southeast Asia, mainly because the uncertainty of the epidemic still exists. And this is completely different from the financial crisis situation we have encountered in the past, including the problems encountered by the US trade war with China.
What needs to be paid attention to is that the current willingness to cooperate globally is declining.
For example, it is difficult to find a common theme at this year's G20 summit. Countries have different views on jointly maintaining economic growth and have different standards for developing the digital economy together.
As for China, if normal production cannot be resumed immediately and the strategy of further opening up is further implemented, then our external circulation will encounter major problems, which in turn will affect the internal circulation.
"I have always believed that, objectively speaking, the United States is not bad at economic games. For the United States, it is a matter of market leverage and profit sharing. In the past it was more difficult in global free market practice. But now , under political and security pretexts, the United States can turn the market into a tool for targeted purchasing subsidies, even if there is a certain economic cost, it must attack competitors.However, after the Russia-Ukraine conflict, the The United States and the West have imposed sanctions on Russia, including the passage of the law on US aid to Ukraine. It can be seen that the United States and the West are still advocating for political correctness and can bear certain economic costs. This is the current state of international politics.It can therefore be assumed that, after more than two years of exploration, the competitive strategy of the United States against China has begun to take shape and strike effectively through the combination of modules, creating a strong anti-Chinese and containment ecology. The alliance is part of the fact that as long as the United States supports these countries, it weakens their competitors. In this structure, the biggest problem right now is that Japan, South Korea and Europe will be cut off from China's value chain in terms of high-end technology. In the past, Japan, South Korea, Europe and China were deeply connected by economic interests, but now, for various reasons, technological cooperation between China, Japan and South Korea is declining.
"Therefore, the most urgent task is to restore normal production and living conditions and create an expanded and open space and environment. Once the window period is lost, it will have a great impact on our country's future."