Long-lasting advantages of China's commercial environment
- By Mei Xinyu
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E-mail China.org.cn, September 15, 2015
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Workers take photos of the robot welding production line in a plant owned by Sicher Elevator Co. Ltd., where 1.65 billion yuan (US$263 million) has been invested in replacing workers with robots. |
Let's take energy costs as an example. According to a Boston Consultant Group (BCG) report, "The Shifting Economics of Global Manufacturing," if the U.S. manufacturing cost is set at the base of 100, then that in the Chinese mainland has risen to 96 with the increase of energy costs one of the major reasons.
The cheap energy in the United States is greatly attractive to Chinese textile enterprises and other manufacturers. However, since the collapse of oil prices, the primary commodity market as a whole has become bearish and this may last 10-15 years.
The U.S. advantage in domestic energy costs has greatly lessened in this environment. And, the U.S. government's loosening control on oil and gas exports will further lessen and eliminate this advantage. Furthermore, Barack Obama's Clean Power Plan may even push U.S. domestic energy costs higher than East Asia. In this situation, it is impractical to expect China will remain at a disadvantage for a long time.
Even in some developing countries that are trying to catch up with China, the advantage of labor costs is offset by shortcomings in other aspects that are rooted in their systems and cannot be changed easily. In India, although the labor cost is much lower than that in China, its high land acquisition cost greatly erodes any advantage.
Besides, taking into consideration China's advantages in infrastructure, associated industries, public services and quality of human resources as well as the determination and efforts of the government and people, we can expect China to remain in a long-term relatively advantageous situation in its commercial environment, manufacturing industry and foreign trade.
The writer is a researcher with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.
The article was written in Chinese and translated by Li Bin.
Opinion articles reflect the views of their authors only, not necessarily those of China.org.cn.
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