Original: Tianya Supplement Source: WeChat official account: Tianya current events have been reprinted with authorization
I believe many people may have a question: in 2018, Trump launched a trade war against China. After Biden took office in 2020, he did not cancel the “wrong” policies of the Trump era. On the contrary, Biden continued to abuse “national security” to crazily suppress Chinese companies in the United States… Why does China not learn from the United States to suppress American companies in China based on “national security”, why not also drive them out of the Chinese market?
There are also many people on the internet constantly calling for the government to take similar measures to drive many American companies, including Apple phones, out of China.
But China did not do that.
The Apple phone is indeed a high-end phone, with the highest performance among all phones. Currently, the latest version of the iPhone 15 adopts chips of 3 and 4 nanometers, while the upcoming iPhone 16 may adopt chips of 3 nanometers. All smartphone chips in China cannot reach the level of Apple smartphones.
However, as we all know, high-end phones are not a necessity. While Apple’s performance with 3nm and 5nm chips is excellent, phones with 14nm chips can also be used – for the vast majority of people, phones that can use WeChat, play games, or watch videos are sufficient, while phones with 14nm chips are sufficient.
In fact, many high-end manufacturing products are not essential: without an Apple phone, Xiaomi and VIVO can also be used; Without a Hummer, Chery can still use it; Without Boeing, high-speed rail can also replace
High end manufacturing is good, but mid to low end manufacturing is something that the vast majority of people can use and afford.
In fact, many of China’s mid to low end manufacturing is also made in the United States.
For example, shampoo Pantene, Rejoice, Head&Shoulders; Hushubao; Tide, Blue Wave, etc. are all owned by Procter&Gamble in the United States; Zhonghua Toothpaste is owned by Unilever in Europe, but behind it is American capital; In addition, Coca Cola, KFC and Pizzahut are all American.
Harbin Beer is famous, but in fact, it is also an American enterprise – in 2004, American brewer Anheis Company (AB) acquired a 99.66% stake in Harbin Beer and privatized Harbin Beer Company.
During the period of US Soviet hegemony, China and the Soviet Union had a very good relationship at the beginning, but later the Soviet Union gradually embarked on the road of “social imperialism” and wanted to control China’s military. China and the Soviet Union began to “hate” each other, and the Soviet Union began to suppress China
After the failure of the Korean War and the Vietnam War, the United States was at a disadvantage in its struggle for hegemony with the Soviet Union. In order to jointly confront the Soviet Union, China and the United States began to cooperate
Not long after, China began its reform and opening up. At that time, the United States was not the same as it is now. At that time, the United States was not only very strong in high-end manufacturing, but also had a unique global presence in mid to low end manufacturing. Therefore, many American companies engaged in mid to low end manufacturing took the opportunity to enter China.
Many American capital has been entering China for too long, gradually becoming “localized”, resulting in many of us not knowing that they are American goods.
After the United States launched a trade and technology war against China in 2018, China launched a counterattack, but the intensity of the counterattack was relatively small, only imposing tariffs on some goods originating in the United States.
Apple, Hummer and other high-end manufacturers, Head&Shoulders, Rejoice and other low-end manufacturers, without them, we can have other alternatives, but why did China not launch sanctions against them? Why didn’t you drive them out of China?
Let’s take the Apple phone as an example.
I can make it clear to everyone that if China imposes sanctions on Apple phones, then Apple will be ruined immediately.
Why?
Let’s take a look at the Apple phone industry chain and we can see that there are 80 upstream industries and 8 downstream industries involved in the Apple industry chain, all of which are provided by numerous Chinese companies. Among the numerous upstream industries, electronic components alone involve 54 upstream industries and 299 downstream industries.
Think about it, if China prohibits any company from providing goods and services to Apple phones, do you think Apple can still survive? At that time, the difficulty of finding a replacement for Apple was beyond doubt, and the cost would probably have to double more than that.
You can use WeChat, watch videos, and play games. An Apple phone costs 20000 yuan, but a Xiaomi only costs 2000 yuan. Which do you think people would choose?
If your performance is good and the price is slightly higher, then everyone can still accept it. However, your performance is just a little better, but the price is outrageously expensive. Who would buy yours.
Why can’t the United States use its entire national power to defeat Huawei?
Not only does Huawei work hard on its own, but it is also supported by an extremely large number of Chinese mid to low end manufacturing companies behind Huawei. Although we have not yet broken through the core high-end chips, we can replace them with mid range chips, while other parts of Huawei are completely not afraid of US sanctions.
What about high-end manufacturing in the United States?
The high-end manufacturing in the United States is very powerful, we admit it, but the middle and low end manufacturing in the United States is really not enough. Although the technological content of middle and low end manufacturing is not so high, it is not so simple for you to establish a sound and complete industrial system – if you only develop a complete industrial system for the sake of Apple smartphones, the cost will be unimaginable.
The truly terrifying thing about China is that we have a complete industrial system and have achieved almost every industry to the extreme, reducing costs to a level that other countries simply cannot compete with.
So, if we launch sanctions against Apple phones, I estimate that Apple phones may not survive.
But why hasn’t China taken a “hit” on Apple phones? Why didn’t you take advantage of the numerous American goods in China?
In fact, in today’s increasingly fierce competition between China and the United States, we have not only not suppressed American companies in China, but also encouraged American companies to invest in China.
Why is China still welcoming American companies to invest in China?
Because after it came to China, it could no longer be separated from China – because China has the world’s most complete industrial system and various supporting facilities.
Perhaps some people may say that foreign companies coming to China must make money from the Chinese people, so wouldn’t we be at a loss?
What perspective do you need to take on this issue.
We still use Apple phones as an example.
The revenue of Apple smartphones in 2022 was $394 billion, of which $74.2 billion was in the Greater China region, accounting for only 18.8%.
The production line of Apple phones is almost all in China, and the annual tax payment to the Chinese government is calculated at 20%. In addition, hiring Chinese workers also results in a labor cost of 20%… How much do you calculate for this amount?
Of course, the data is not so simple to calculate. On the surface, Apple phones do not pay as much tax to the Chinese government, but in fact, many taxes are scattered among Chinese parts suppliers – Chinese parts suppliers pay taxes to the country.
A US company moved its company to China, using Chinese parts and workers to produce and manufacture 5 goods, of which 4 were sold to other countries. How much tax and employment did you say it provided for China?
If we drive this enterprise out of China, domestic products can replace the domestic one, but can it replace the foreign market share?
Let me give another easy to understand example: there is nothing in our village, but many enterprises have come to build factories in our village, not only paying a lot of taxes to our village, but also providing jobs for everyone in our village. Do you think we should drive this enterprise out of our village?
The US government is desperately demanding that American companies return to the United States to build factories, why are they not returning?
It’s because the United States no longer has “cheap” mid to low-end accessories.
The energy of American capital is enormous, not only in terms of technology, but also in terms of political and business relations.
Imagine: Even if there were a company in China that could rival Apple, could it completely replace Apple’s position?
No matter how good your product is, you have to sell it.
No matter how good Huawei phones are, can they be sold in the US market? No matter how good Huawei phones are, a European country has banned them even if they say they are banned, but have you seen which country dares to ban Apple phones?
Take a look at Tiktok International’s kTikTok. You set up the company in the United States, employ American workers, and the data is controlled by Americans. The United States also prohibits its existence.
American capital possesses not only hard power, but also strong soft power – they have stronger political and commercial relations internationally than Chinese enterprises, and they have a better understanding of the culture and laws of capitalist countries.
Those secrets cannot be accumulated in a day or two, they were accumulated by American capital after hundreds of years of cultivation in the world.
So, we must leverage the power of American capital.
The United States is currently going against globalization, and neither Trump nor Biden can resist this trend. However, we must continue to increase openness and shoulder the banner of “globalization” because we have a complete industrial system and a “unique global” mid to low end manufacturing. We need to leverage the power of American capital to continue selling mid to low end manufacturing globally – Apple has sold phones worldwide, And besides the core chips, Apple also has many mid to low end accessories, which means that Apple has helped us sell mid to low end manufacturing worldwide?
Of course, American capital also needs to leverage China’s power to maximize its own interests.
Because China has signed 19 free trade agreements with 26 countries and regions:
There are 10 ongoing negotiations,
There are 8 being studied:
Compared to the United States’ “closed door policy”, China is further increasing its pace of opening up.
China conducts free trade with so many countries and regions, and Chinese goods not only have the advantage of being “cheap”, but also have the advantage of taxation, which undoubtedly has a huge attraction for American capital.
Some people always say that India, Vietnam, and others may replace China’s position as the “world’s factory”. Let’s not talk about the advantages of the complete industrial chain, but even the tariff advantages – India dare not even join the world’s largest free trade zone, RCEP.
If you haven’t joined the free trade zone, even if your product cost is lower than China, the tariff may make your product lose its competitive advantage.
Perhaps some people may have doubts: Will China’s signing of free trade agreements with so many countries lead us to repeat the mistakes of the United States and also lead to the hollowing out of our industries?
China has signed “zero tariff” free trade agreements with so many countries and regions, and it is certain that some companies with relatively simple industrial chains will move to countries with lower raw material and labor costs. If they want to develop, they will also “concede benefits” to other countries, but we have control.
Why?
Because we have institutional advantages.
The United States is a capitalist country, with private banks, electricity, energy, etc., so the US government has almost no ability to balance enterprises. However, we are different. Our state-owned enterprises control industries that are related to the national economy and people’s livelihood, and have a strong ability to balance the enterprise.
Alibaba, Tencent and other companies are strong, but they have not yet contributed 100 billion yuan to “common prosperity”.
Do you think they are ‘willingly’?
It’s no use being unwilling, because China has strong control over capital, unless you don’t want China, a large market with a population of 1.4 billion.
No Chinese company would be foolish enough to give up such a large domestic market in order to make money from other countries.
So, we don’t have to worry about Trump’s dilemma of ‘letting American companies go back to the United States to build factories, they just won’t’.
Independence and autonomy are certainly very important, but the great rejuvenation of the Chinese nation not only requires independence and autonomy, but also relies on all available forces.
American capital is one of the forces we can leverage!
—–This concludes the entire article.