Original: Tianya Supplement Source: WeChat official account: Tianya current events have been reprinted with authorization
On the afternoon of May 30th, Musk’s private plane landed in Beijing, marking his first visit to China in three years.
Musk’s visit to China received a high-level reception from China. Three ministers met with Musk, including Foreign Minister Qin Gang, Minister of Industry and Information Technology Jin Zhuanglong, and Minister of Commerce Wang Wentao.
In my impression, it is extremely rare for so many high-level officials to meet a foreign entrepreneur (capitalist) – in my impression, it seems like Apple CEO Tim Cook received a similar high-level reception during his first visit to China, when Vice President of the State Council Li Keqiang and Beijing Mayor Guo Jinlong received him.
The high-level meeting with Musk in China cannot be simply hosted by a few high-level officials, it must be meaningful – the foreign minister’s meeting indicates a relationship with diplomacy; The meeting with the Minister of Industry and Information Technology indicates that it is related to industry and information technology; The Minister of Commerce received an interview, which indicates that it is related to business.
It is obvious that the significance of Musk’s visit to China this time is definitely extraordinary.
So, what signals are released behind this?
We can directly conclude that China’s high-level reception of Musk is actually aimed at “attracting” major capitalists from the United States and demonstrating to the world that China needs to shoulder the banner of “globalization”.
Below, we will briefly analyze how this conclusion was drawn.
We all know that there are major problems in the United States today: there are a total of 330 million people in the United States, but the number of impoverished people has reached 40 million; The wealth of the top 1% of the “super rich” in the United States has exceeded all the wealth owned by households with incomes in the middle 60%
In fact, this issue has already emerged during the Obama administration.
The reason why the United States has such a serious problem is that, in the context of globalization, a large number of low-end manufacturing industries have moved out, and the American industry is severely “hollowed out” – although the profits of the low-end manufacturing industry are not high (such as the textile industry), it is a labor-intensive enterprise that requires a large number of workers and can provide a large number of job opportunities.
It is precisely because of the continuous hollowing out of American industries that during the Obama administration, he proposed strategies for “re industrialization” and “revitalizing American manufacturing”.
But he failed.
Why did it fail?
There are two main reasons:
Firstly, the United States is a capitalist country;
In capitalist countries, in the field of economic development, capitalists are the “big boss”, while the government is just the “night watchman” (at most also known as the “second boss”). The government has no ability to balance capital – the US government has almost no enterprises and does not hold shares in large enterprises, unlike Chinese state-owned enterprises that control industries related to the national economy and people’s livelihood, including banks, electricity, energy, and resource-based enterprises, It can effectively balance private enterprises.
Capitalists are big bosses, and the government is just a “gatekeeper”. You are the gatekeeper, and let the big boss listen to you. How could that be possible?
If you want the big boss to listen to you as a gatekeeper, it’s not impossible, but the premise must be: you have to make me rich!
As a gatekeeper, Obama must provide benefits to capitalists if they want to move their businesses back to the United States. But Obama cannot give them any benefits.
You want capitalists to go back to the United States to build factories because they are unprofitable and lack the ability to balance enterprises. Do you want to express your feelings to them?
Secondly, the Democratic Party is a “Madonna Bitch” who cannot save face and “overthrow” the WTO established under its own leadership.
If Obama wants American capital to return to the United States and build factories, he must make them profitable. However, in the context of globalization, it is impossible for American capital to return to the United States to build factories without profit unless the United States imposes high tariffs on low-end manufacturing in other countries.
The US government has relatively little power domestically, but greater power externally, mainly including military, diplomatic, and tariff powers.
The US government has the power to raise tariffs. As long as tariffs are raised on other countries’ goods, there will be profits in developing low-end manufacturing, which can bring the manufacturing industry back. However, rashly imposing tariffs on other countries’ goods means that the United States must break the rules of the WTO.
However, the establishment of the WTO was first promoted by the Democratic Party.
On January 1, 1995, the World Trade Organization officially began operations, and the biggest promoter was then Democratic Party President Clinton – which was the main reason why Trump deeply hated the Clinton couple because they believed that it was Clinton and Hillary who led the United States to “hell”.
The WTO was established by the Democratic Party, and Obama is also a Democrat, so he cannot withdraw from the WTO. Moreover, behind the Democratic Party are Wall Street and Silicon Valley high-tech consortia, and in the process of globalization, those multinational capital groups have benefited, and they will not allow Obama to withdraw from the WTO.
It is precisely because the WTO is no longer in the overall interests of the United States, but Obama cannot withdraw from the WTO, that Obama has “taken a different path” and created a TPP and TTIP, hoping to create a new “group” to replace the WTO.
Due to the unusually large and complex content involved in TPP and TTIP, and the significant resistance they faced, Obama still ended in failure, ultimately leading to the failure of Obama’s “re industrialization” and “revitalization of American manufacturing” strategies.
Obama served as president for eight years, and the domestic problems in the United States not only remained unresolved, but also worsened, leading to Trump’s inauguration.
Trump seized the “soft spot” of the American people, constantly shouting to withdraw from globalization and launch a trade war against the world, including China, and gained the support of a large number of grassroots people.
In the end, those at the bottom sent Trump to the presidency.
After Trump took office, he launched an unprecedented trade war against China, while also showing no mercy to his allies such as the European Union, Japan, and South Korea
The effect of Trump’s approach on “revitalizing American manufacturing” is very obvious, but it harms the soft power of the United States and shakes the interests of multinational capital interest groups… Therefore, the Democratic Party and multinational capital groups teamed up to deal with Trump, coupled with Trump’s poor “fate” and encountering a once-in-a-century pandemic, and ultimately Trump was unable to be re elected.
In 2020, Biden was elected as the President of the United States.
After Biden was elected as the President of the United States, he actually “continued” Trump’s policies, but he was more “insidious”, not as direct and hateful as Trump.
After Biden took office, even with inflation reaching nearly 10%, he did not lift the huge tariffs imposed on China; Although Biden granted “tariff exemptions” to some European allies, he was actually more ruthless than Trump because he planned the Russo Ukrainian War
Trump’s launch of a trade war against the European Union only made Europe uncomfortable, but Biden’s planned Russia Ukraine war claimed the “life” of many European companies – and most importantly, the EU still had “unspeakable pain”.
Biden is now struggling: without continuing Trump’s trade war, American manufacturing cannot develop; If manufacturing cannot develop, the bottom Americans will support Trump; Continuing Trump’s trade war would result in other countries taking action against American multinational capital groups, and the Democratic Party would lose the funding and public opinion support of big capital
After weighing, Biden still chose Trump’s “path” because without a large number of grassroots support, the Democratic Party would find it difficult to gain power.
The Democratic Party is based on ideology, which means things like “human rights, democracy, freedom, and equality”. Therefore, the vast majority of black and Hispanic Americans (including Asians) in the United States support the Democratic Party – the Republican Party is a conservative party, mainly white, and relatively dislikes immigrants and foreigners.
However, with the continuous hollowing out of American industries, a large number of ordinary people have lost their jobs and faced difficulties in life, and Democratic supporters have begun to waver
Due to systematic discrimination in the United States, most black and Hispanic people are at the bottom of society. After the hollowing out of the American industry, black and Hispanic people bear the brunt and become the biggest victims, losing their jobs.
At this point, a contradiction emerged: the Democratic Party emphasizes “equality” and does not discriminate against black and Hispanic people, but it advocates globalization, causing them to lose their jobs; Although the Republican Party is a conservative party that dislikes black people and Hispanics, its anti globalization allows it to have jobs.
Simply put, black and Hispanic people can only choose between “equality” and “job opportunities”.
Undoubtedly, if there is only one choice between eating and dignity, then one can only choose ‘eating’.
So, a large number of black and Hispanic people turned to support Trump.
When Trump ran for US President in 2016, 78% of Hispanic voters held a negative view of him, but by the 2020 election, this proportion had dropped to 56%; When Trump ran for the presidency of the United States in 2016, black support was only 8%, but by the 2020 election, black support for Trump was as high as 34%.
If it weren’t for the once-in-a-century pandemic and the Democratic Party’s use of the pandemic and ballot mailing to cheat, then Biden would have no hope of winning – and even now Trump does not admit defeat.
After understanding the above content, you will fully understand the current dilemma faced by the Democratic Party: if the Democratic Party continues to promote globalization, one of its most important staunch supporters, black and Hispanic, will all go to support the Republican Party.
The Republican Party’s incitement of “white supremacy” has won the support of the vast majority of white people. In addition, it attracts a large number of blacks and Hispanics with anti globalization… If this continues, the Democratic Party will no longer be able to defeat the Republican Party.
What should the Democratic Party do?
This is the policy Biden is adopting now: continuing the policies of the Trump era.
Biden not only did not lift the tariffs imposed on China and continue to abuse “national security”, but also intensified it even more; At the same time, Biden will also restore tariffs to Southeast Asian countries and suspend trade negotiations with Latin American countries
When Trump launched a trade war against China, he deliberately left a “gap”: due to the irreplaceable nature of Chinese manufacturing, if huge tariffs were imposed on China, all tariffs would be borne by the Americans themselves, and prices would skyrocket. The domestic opposition in the United States would inevitably be very strong. Therefore, when Trump launched a trade war against China, Intentionally leaving behind the “gap” in Southeast Asia – as long as Chinese enterprises transport their goods to Southeast Asia for “labeling” and become products of Southeast Asian countries, there is a tax advantage involved.
There are two benefits to doing this:
Firstly, it has caused Chinese products to lose their “brand” effect;
China’s products are high-quality and affordable, and many of them have already formed a relatively high brand effect. After the United States launched a trade war with China, Chinese enterprises had to assemble in Southeast Asian countries to avoid high tariffs and paste them as “brands” of Southeast Asian countries, which could weaken the brand effect of Chinese goods (the same goods with brands are definitely priced higher and easier to sell).
Secondly, give the American people a “buffer period”.
If Trump does not leave behind the gap in Southeast Asia, then the price for Americans to purchase low-end manufactured goods will at least double, which will inevitably lead to a significant increase in prices. However, after leaving the gap in Southeast Asia, Chinese goods need to go to Southeast Asian countries for a round of trade, which can increase the export cost of Chinese goods, but this cost is smaller than the additional tariffs.
For example, if a pair of Chinese shoes is sold to the United States for $10, and now the United States has imposed a 100% tariff on us, Americans must spend $20 to buy these shoes. However, due to the tariff exemption implemented by the United States on Southeast Asian countries, Chinese shoe manufacturers will first ship their shoes to Southeast Asia, label them with Southeast Asian brands, and then export them to the United States. Americans can buy these shoes for only $15.
For example, the photovoltaic industry is like this.
China’s photovoltaic industry is very powerful. The United States has imposed huge tariffs on China’s photovoltaic industry, and many Chinese companies have exported the photovoltaic industry to the United States via Southeast Asia, resulting in a significant increase in photovoltaic exports from Southeast Asian countries to the United States (any photovoltaic industry in Southeast Asian countries belongs to China).
If China’s photovoltaic industry bypasses Southeast Asian countries, the cost will increase, and photovoltaic companies in the United States will have profits. However, once the photovoltaic industry in the United States develops, the United States will “take it seriously” and strictly scrutinize the photovoltaic exports of Southeast Asian countries – at that time, it would be impossible for Chinese photovoltaic companies to export through “OEM”.
Recently, the US Congress passed a resolution: the US Senate passed a resolution to cancel Biden’s decision to exempt tariffs on Southeast Asian photovoltaic panels, with 56 votes to 41. The Republicans in the Senate unanimously voted in favor. If the resolution is ultimately passed by the White House, tariffs on solar panels imported from Southeast Asia could reach up to 254%.
However, this resolution was rejected by Biden.
Biden’s veto of this resolution is not to “acquiesce” that China’s photovoltaic industry will continue to bypass Southeast Asia for exports to the United States, but because the United States’ photovoltaic industry is not yet ready – imposing huge tariffs on Southeast Asia’s photovoltaic industry will lead to a surge in domestic photovoltaic product prices in the United States. While this can accelerate the development of the US photovoltaic industry, it will also lead to a surge in fossil energy prices.
Biden’s imposition of tariffs on Southeast Asian countries has become inevitable, just when it will be implemented.
In addition, during the Trump era, not only did he launch a trade war against China, but also against Europe and Latin America, especially with significant modifications to the trade agreements of Latin American countries. Trump believed that the free trade agreements signed by the United States with Mexico and Latin American countries harmed the interests of the United States, so he renegotiated with those countries and modified a large number of terms.
Originally, Latin American countries thought that after Biden took office, they would restore their previous policies, but Biden did not do so.
On May 24th, the Financial Times website published an article titled “The United States’ unwillingness to reach a trade agreement has shifted Latin America towards China,” which explicitly stated that the Biden administration has ruled out the possibility of signing a new trade agreement with Latin American countries.
Do you see that the current Democratic Party and Republican Party have infinitely “converged” in foreign trade policies, and both are beginning to go against globalization – if the Democratic Party does not go against globalization, then American manufacturing cannot develop and will lose the votes of black and Hispanic people.
If the United States withdraws from globalization, China must shoulder the banner of “globalization”.
Why?
Because globalization is beneficial to China, our mid to low end manufacturing industry still holds an advantageous position.
The Democratic Party of the United States has also begun to counter globalization. What should multinational capital groups in the United States do?
Trump has launched a trade war against so many countries, and Biden has continued Trump’s policies. Therefore, other countries will inevitably retaliate against American companies – the decline of low-end manufacturing in the United States has led to retaliation against the high-tech industry in the United States.
For some poor countries, high-end manufacturing is not a necessary commodity for production or daily life – without an Apple phone, I can use Xiaomi and VIVO, among others.
At this moment, China’s opportunity came.
If we attract all the high-tech industries of the United States to China, then American high-tech enterprises no longer need to worry about being sanctioned by other countries, because China has taken over the banner of globalization from the United States – currently, China has not only signed free trade agreements with Southeast Asian countries, but also many South American countries, let alone Africa.
For example, China has now signed free trade agreements with Chile, Costa Rica, and Peru in South America, Ecuador signed agreements with China this month, and Panama and Uruguay are also planning to sign agreements with them.
If American high-tech enterprises continue to stay in the United States, then as the United States continues to counter globalization, other countries will inevitably retaliate against them. However, if they move their company to China, they can still make profits in the world as before.
What is the current problem?
American high-tech groups are wary and dare not come to China easily.
There are two main reasons:
Firstly, the current “anti China” situation in the United States is very fierce, and American high-tech enterprises are afraid that they will be suppressed by China after coming to China;
Secondly, the systems between China and the United States are different.
If China wants American high-tech enterprises to come to China, it must dispel their concerns in both aspects.
How to dispel the concerns of American high-tech enterprises?
This is the main reason for China’s high-level reception of Musk.
In today’s increasingly fierce competition between China and the United States, the high-level reception of Musk by the Chinese Ministry of Foreign Affairs, Ministry of Commerce, and Ministry of Industry and Information Technology is to inform high-tech enterprises in the United States:
The Chinese government attaches great importance to high-tech enterprises in the United States. As long as you come to China and act like Musk, China will not only not be angry with you because the US government suppresses us, but will also support you.
If you observe carefully, you will find that the United States not only imposed huge tariffs on Chinese goods, but also drove many Chinese companies such as Huawei, DJI, TikTok, and China Mobile out of the United States. However, China has not driven American companies out of China.
For example, Tesla, Apple, Coca Cola, etc., all of which China has substitutes, China can completely follow the example of the United States and use the excuse of “national security” to drive them out of China. However, China did not do that.
In recent years, China has only taken action against “Meiguang”.
China’s attack on Meiguang is not only due to the development of China’s Yangtze River storage, but also because Meiguang often does things like “eating Chinese food and smashing Chinese pots”.
A company like Tesla that eats Chinese food but never hits the Chinese pot, China will not suppress it – take a look at Musk, who has never said a bad word about China in public, and all he said is good.
The high-level reception of Musk by Chinese executives is to tell those American high-tech enterprises that if you come to China to build factories, as long as you do not follow the US government and oppose China, China will treat you like Musk.
In this way, the first concern of American high-tech enterprises has been lifted: although the US government is very unfriendly to China now, as long as I do not follow the US government, then coming to China to build factories will not be suppressed.
The second concern of American high-tech companies is that the systems between China and the United States are different. If I move the company to China, China will use its own means to “steal” or force me to hand over core technologies. What should I do?
This is the second reason for China’s high-level reception of Musk: you can adopt a sole proprietorship.
Tesla is a sole proprietorship.
In the past, if foreign investors wanted to invest in China, they had to have conditions: China provided you with such a large market and platform, or “joint venture”, and the profits were divided equally among everyone; Either “trade the market for technology”, you make a profit, and I acquire the technology… It is very difficult to have a sole proprietorship.
However, Musk gained a benefit that most companies find difficult to obtain: Tesla can be a sole proprietorship, the money earned belongs to it, and China does not want its technology.
Of course, China also does not have any requirements for “sole proprietorship” enterprises, there are mainly two requirements:
Firstly, a sole proprietorship must prioritize “exports”. You cannot use China’s vast market, cheap labor, and complete industrial chain to make money exclusively from China. You must use China as a platform to export in large quantities to other countries;
Secondly, you must hire a large number of Chinese personnel, use components produced in China, provide a large number of job opportunities for Chinese people, and pay more taxes to the Chinese government.
In fact, these two requirements are not considered requirements at all, after all, China is not India. Building factories in China and hiring high-quality Chinese employees and cheap components is in line with the interests of American capital.
This is very tempting for American capital: it will not be “retaliated” by the Chinese government and can be a sole proprietorship, which was unimaginable in the past.
The United States is everywhere anti globalization, and American high-tech enterprises will be affected sooner or later. As long as they come to China, they will not be affected – China has signed various free trade agreements with many countries around the world, and producing, manufacturing, and selling goods in China will not be retaliated by other countries.
So, what benefits will China gain?
China naturally cannot do business at a loss. A large number of high-tech enterprises come to China and export high-tech products to the world based on China. This not only provides China with a large number of jobs, but also pays a large amount of taxes to the Chinese government; At the same time, American high-tech enterprises hire a large number of Chinese workers and use Chinese parts, which not only further improves China’s supply chain, but also improves China’s management technology and some non core technologies
To build a factory in China and hire a large number of Chinese people, those who cannot always work in that company will always resign, but they have learned management experience and technology, which is conducive to China’s high-tech breakthroughs; Using domestic components, if the quality of domestic components is not enough, American companies must help them improve their technology. Although those are non core technologies, they can further improve the quality of China’s industrial chain and make the competitiveness of Chinese products stronger
China’s high-level reception of Musk is actually sending an important signal to American high-tech enterprises: come to China to build factories, here are the benefits you want.
If all high-tech companies in the United States come to China, abandon the United States, and use China as a platform to export high-tech products to the world, what would be left of the United States at that time? Mid to low-end manufacturing has emerged, but high-tech enterprises have all gone to China. Is the United States still a superpower?
China’s high-level reception of Musk, referring to high-tech enterprises in the United States, is a “bottomless blow” to the US government.
We not only want China to become the center of low-end manufacturing in the world, but also the center of high-end manufacturing, and even the center of politics, economy, and culture!