Forced to Liangshan's "Complete Industrial System": China's Whole Industry Chain Road...

Last time I said that "what is a complete industrial system?" What's the point? After the topic, we will talk about why China has been able to build a complete industrial system (the whole industrial chain) and how it has embarked on this road.

By the way, "what is the use of China's complete industry is not all low-end", "the pursuit of industrial completeness is a Cold War mentality, saying that engaging in internal circulation is actually a closed country", "what do you want to create yourself against the laws of the economy, even the United States has not pursued anything to produce itself, there are foreign good goods you still have to use your own people rotten goods are very proud? ] and other points of view to say their own opinion.

First, the pursuit of the whole industrial chain is the instinct of industrial countries, and other countries do not want to do it but cannot do it

Many people have a misunderstanding, seeing that developed countries such as Europe and the United States do not engage in a complete industrial system, but they can also develop industry and live a prosperous life, they think that people are proceeding from "comparative advantage" and "free trade" to engage in international division of labor and cooperation, and they do not despise the so-called "complete industrial system" at all.

He even believes that "the pursuit of complete industry is a Cold War mentality, saying that engaging in internal circulation is actually a closed country", "everything wants to create its own contrary to economic laws, even the United States does not pursue what it produces itself, and the international division of labor based on comparative advantage is the king." This is problematic.

First of all, as an industrial country, it has the motivation to pursue a complete industrial system, as is the case in Britain, Germany, France, the United States, and the Soviet Union. Britain at the time of the first industrial revolution, the United States at the time of the second industrial revolution, Germany, these historical factories in the world have the most complete industrial system at that time.

In 1850, Britain was the first country to complete the industrial revolution, the industrial output value accounted for 40% of the world total, the trade volume accounted for 21% of the world total, at this time the United Kingdom properly had a complete industrial system, and on this basis completed the great cause of the "empire that never sets".

In the United States in 1900, the industrial output accounted for about 30% of the world's industrial output, and its industrial system continued to expand in the next 50 years, and by 1950, the industrial output value of the United States accounted for even a staggering 55% of the world. In the United States at that time, from steel to ships, from matches to muskets, from screws to airplanes, everything was as it should be.

So why do industrial countries spontaneously pursue a complete industrial system?

In fact, this is determined by the industry's own nature, for the industry, the most important thing is to control the cost. In production, the upstream and downstream enterprises in the same industry are gathered in the same region, and through the connection of supply and demand relations between cluster members, the localization of procurement and the integration of the whole industry will effectively enhance the cost advantages and scale advantages of the entire cluster. Therefore, any region, or even any industry, has industrial agglomeration, opening up the natural instinct of the upstream and downstream industries.

For example, the Wenzhou low-voltage electrical appliance cluster, to some extent, is regarded as a complete industrial system in the field of low-voltage electrical appliances, covering metal parts, alloy materials, injection molding parts, punching, pickling and mold processing, etc. A total of hundreds of thousands of low-voltage electrical accessories, the local matching rate can reach more than 85%, the production of an electrical product, in the local can find full accessories, the industrial chain of anti-risk ability greatly improved. These closely linked and frequently interacted sub-industries and their affiliated enterprises constitute a huge industrial cluster, which not only reduces the procurement and supply costs of Wenzhou enterprises, but more importantly greatly facilitates the communication and interaction between upstream and downstream enterprises, thus creating conditions for both sides to write in technological innovation.

With the advantage of the cluster, Wenzhou has become the country's largest low-voltage electrical industry base, accounting for more than 65% of the national market share, the cluster covers more than 200 series of power energy transmission, substation, distribution of more than 200 series, more than 6,000 types, 25,000 model products, its industrial scale and the number of enterprises ranked first in the domestic counterparts, has formed the right to speak in the industry, leading the formulation of national standards, industry standards a total of 226, 1 international standard.

For another example, while Samsung relocated its mobile phone factory to Vietnam, it also required nearly 100 enterprises in its upstream and downstream to establish supporting factories around its industrial park to form upstream and downstream industrial clusters to reduce costs. This can be seen as Samsung building a "relatively complete industrial system" for its mobile phone industry in Vietnam, because it can effectively control costs.

From the perspective of economic development, the more complete a country's industrial system, in other words, the coupling degree of its internal industrial clusters will also increase, then the lower the cost of industrial supporting production in the country, the higher the efficiency of each other's production support, that is, it can obtain a certain product in a short time and at a very low price. When foreign investment, it is also easy to find a local manufacturer, which greatly reduces the cost of product production (importing parts from foreign countries not only needs to pay freight, but also often has to pay tariffs). China's industrial development is based on a complete industrial system, and then use industrial upgrading to promote the integrity of the industrial system, which is just a natural law of the development of an industrial country.

When the industrial system was not large, Britain, France, Germany, the United States, Japan, and the Soviet Union all practiced this way. Later, with the development of the times and the iteration of technology, the industrial division of labor became more and more meticulous, for example, the tank in The Second World War was only a few thousand parts, and now a tank has reached more than 30,000. The industrial system is getting bigger and bigger, so that many industrial countries are not able to do so, and they can only focus their professions on some advantageous industries.

The simple reason is that the population is not enough. Industry needs to be supported by the number of people. In the modern industrial system, a complete industrial chain involves at least millions or even tens of millions of employed people (see "The Story of the Pencil", the production of a pencil requires the participation of thousands of people).

Cars, for example, are usually made up of more than ten thousand individual parts that cannot be disassembled. Extremely complex special vehicles such as F1 racing cars have up to 20,000 individual components. Take the fool's algorithm to calculate, that is to say, at least ten thousand or so related industries, each industry a hundred people is a million people, each person has a family of three, the whole country wants to install a car The bottom line is three million people.

This is just an automotive industry. The complete industrial system also has upstream and downstream industrial chains, as well as communications, ships, metallurgy, the people still need to live and eat, and it takes some people to build houses and infrastructure, so the initial industrialization level of a country is 10 million people.

For example, in Germany, the total population of Germany in 2019 was 82 million, and the total employment population was 45.3 million, of which the total employment population of the German automobile industry (including vehicle manufacturing plus parts supporting service enterprises) reached 12 million. This determines that they have done the automobile, chemical, and machinery industries, and there is no surplus population to do the communication and Internet industries. Conversely, the size of a country's population also determines the upper limit of the industrial system, because if there are not enough people, everything is in vain.

After the Third Industrial Revolution, the industrial population needed for nuclear energy, aerospace, strategic bombers, super transport aircraft, strategic aircraft carriers, strategic missiles, and so on continued to soar. According to statistics, the number of industrial accessories in the middle of the Cold War has grown to about 30 million, and even the two superpowers of the United States and the Soviet Union are becoming more and more overwhelmed in the face of more than 30 million industrial accessories that are still increasing rapidly. Each population of about 200 million people has been crowded with various industrial categories, and it is difficult to develop a very complex industrial society. Because heavy industry occupies too much of the industrial population and there is a shortage of workers in light industry, the growth rate of living standards of ordinary people begins to slow.

At that time, the United States united with Western Europe, and by transferring low-value-added low-end, labor-intensive industries to Japan, South Korea, Southeast Asia, and Latin America, pulling these countries down into their own industrial chains, using their populations to share the huge industrial pressure they were under, and rebuilding a complete industrial system with a population of one billion.

The Soviet Union and the Eastern European camp, due to the lack of sufficient population and market to promote light industrial production, resulting in the Lack of sufficient consumer goods in the Soviet Union and even the entire Warsaw Pact market, the growth of people's living standards tended to stagnate, the shortage began to appear and gradually spread, more importantly, the lack of sufficient talents to develop new fields, the overall industry is difficult to upgrade itself, and finally lost in the Cold War.

It can be seen from this that for the complete industrial system, other countries do not want to, but can not!

However, China's population of 1.4 billion and the huge depth of development allow us to carry out the layout of the whole industrial chain, from high-end to low-end, from research and development to manufacturing, from high added value to low added value, and through different regions with great domestic differences, we have also achieved comparative advantages and independently built a "complete industrial system".

Second, the repression and threat of Europe and the United States force China to engage in a "complete industrial system"

Many people are wrong to cross-examine the complete industrial system from the perspective of comparative advantage and free trade. Theoretically, comparative advantage and free trade make sense. Global cooperation in the international division of labor is undoubtedly the most efficient. Due to the influence of globalization, many raw materials, semi-finished products, products, etc., sometimes imported from abroad have more advantages than domestic production - the incomplete industrial category of the United States, the missing part, is based on such considerations and selective abandonment.

But the question is: The United States can do this, but can China do it? Or will Europe and the United States allow you to do this?

Since the First Industrial Revolution, the world has dominated Europe and the United States, monopolizing the world's largest amount of resources and profits, and China is an outlier in this international system. In other words, not only China, but also other Asian, African and Latin American countries are also suppressed by pre-emptive countries such as Europe and the United States. "Comparative advantage" and "free trade" can benefit both sides through fair trade. This in itself is a constraint and is often not available in this real world. The simplest example is the Batumi and Vanasen agreements.

The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Good and Technologies, also known as the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Good and Technologies,

At present, there are 40 member countries including the United States, Japan, the United Kingdom, and Russia. Although the Wassenaar Arrangement provides for Member States to decide for themselves whether to license the export of sensitive products and technologies and to inform other Member States of the Arrangement on a voluntary basis.

But the "arrangement" is actually completely under U.S. control. When a certain country intends to export a certain high technology to China, the United States even directly intervenes, such as when the Czech Republic intends to export "passive radar equipment" to China, the United States exerts pressure on the Czech Republic to force the Czech Republic to stop this transaction.

The Communist Party has a saying: "If you seek peace through struggle, you will live in peace; If you make concessions and seek peace, you will die peacefully." China must break this limitation by developing on its own, and many things, "have" and "not" are two completely different concepts.

Let's tell another story. Chen Zhiwu, a professor of economics, once said a lot of things that made the professor of the National Defense Science and Technology University very angry in the preface to a book:

The Galaxy Computer Department of the National University of Defense Science and Technology spends so much money to provide a lot of exhibits to the China Future Computer Museum, and there is no other use" (this is what Professor Chen himself said at the Boao Forum).

Is that really what Professor Chen said? Let's take a look at the history :

In November 1949, the United States and some countries in Western Europe jointly established a multilateral export control coordination committee, headquartered in Paris, also known as the "Paris Coordinating Committee", referred to as the "Organization of Batumi". The reason for the establishment of this organization is also very simple, it is completely to blockade and prohibit other countries in the world from transferring science and technology to the Soviet Union, which is also a typical product of the Cold War.

After the galaxy I billion machines announced success, Batumi liberalized the sales of 100 million times to China;

After the galactic II billion machines declared success, batumi liberalized the sale of one billion machines to China...

However, the technology restricted by the Wassenaar Agreement can not only be supercomputed, the Wassenaar Agreement defines the dual field of civilian and military use, and the scope of main control includes two lists, one is a list of dual-use commodities and technologies, covering 9 categories of advanced materials and material processing, electronic devices, computers, telecommunications and information security, and the other is a military list, covering a total of 22 categories of various weapons, ammunition and equipment and combat platforms. It can be said that from batteries, chips, televisions, to aircraft engines, rockets, and lithography machines, every technological upgrade and innovation here is firmly limited by this protocol.

China wants to develop related advanced technologies and industries, and if it wants to introduce them, there is no way! That can only be forced to do it yourself. Such a technology, one industry after another to overcome, the result of the final look back, ah! How did I get the "complete industrial system" out?

In other words, China was "forced to Liangshan" by the prohibition of european and American sales, and was forced to develop a "complete industrial system".

Third, the people of the whole country pursue a better life, forcing China to engage in a "complete industrial system"

China's population size is an advantage, but it also brings great pressure. After all, as soon as you open your eyes, there are 1.4 billion mouths to eat. A lot of people are completely unenlightened! They have no idea that continuous population growth requires employment and income, and without the establishment of one industry after another, Chinese people will have to squeeze into the slums like India and Brazil. Do you think Chinese people will agree?

The total population of the United States is only 300 million, and the country only needs to retain a small number of high-tech technologies such as aerospace, military industry, and biomedicine, supplemented by the financial industry that cuts leeks around the world (these industries are characterized by high thresholds and small employment population), which can ensure the overall prosperity of the United States. But China can't, the scale of Chinese is more than one billion, and the modern service industry represented by only a few cutting-edge manufacturing and financial industries is not enough to solve the problem of feeding all the Chinese and even providing a relatively rich high-quality life, which is the most fundamental difference between the national conditions of China and the United States.

With such a large volume in China, in order for Chinese to consume better products, fuller employment, and higher incomes, it is necessary to establish one industry after another in order to make Chinese have a higher level of consumption, a fuller level of employment and a higher level of income.

To satisfy the appetite of a billion-level population-level country, at the current level of science and technology and industry, it is necessary to cover the whole industrial category from low-end and high-end, from matches to rockets, from textiles to textile machines, from screws to high-speed rail. In other words, China's volume requires that China must have a complete industrial system.

Therefore, even if China itself does not want to engage in a "complete industrial system", the vast number of Chinese people who pursue a happy life will be forced to do so.

Moreover, it is necessary not only to complete the industrial system, but also to strive to be highly sophisticated in each specific industry, because the people of Chinese must not only eat enough, but also eat enough. The prime minister has said: "There are still 600 million people in China who have a monthly income of less than 1,000 yuan." And how to increase the income of these 600 million people, can only be to carry out industrial upgrading, build a high-tech industry.

The field of rail transit is a standard example. Remember that by 2010, the National Development and Reform Commission approved the construction of 50 subway lines in 35 cities in 25+10, and the cost of each subway was about 20 billion, of which mechanical and electrical equipment (locomotives, tracks, shield machines, catenary, screen doors, automatic ticket sales, etc.) was at least 8 billion, and 50 lines were 400 billion. Only by forming a research and development and manufacturing system for mainland rail transit equipment can we effectively reduce the cost of subways.

If you buy all imported equipment, the cost of mechanical and electrical equipment will rise by at least 50%, and spend so much money, who will benefit?

International product producers! Their gross profit is at least 50%, so the engineers of the product manufacturer can work 5 hours a day, 5 hours a day, and have more than a month of vacation a year, and go to China in business class + five-star hotels. Product agents spent 5% of the commercial cost to take away about 8% of the profits, VAT 17% (subway construction is the central and local government investment, VAT is the left hand to the right hand), import tax rebates, customs clearance and declaration, the agent did 400 billion yuan of business, leaving only 30 billion profits, only directly created about 3,000 jobs.

If localization is realized, how many people will be supported by 400 billion yuan of industrial sales?

Anyway, Huawei had sales of 239 billion yuan in 2013, 150,000 employees (Huawei's employee salaries are still very high), and there are countless supporting enterprises that outsource or outsource huawei; The procurement of 400 billion mechanical and electrical equipment directly creates more than 400,000 jobs, which I think is more conservative.

How big can the consumption of 400,000 high-income people drive the catering and entertainment home appliances, automobile housing market?

Therefore, the establishment of a complete industrial system in the industrial community and the localization of key technologies and equipment are the ways to truly achieve common prosperity. Otherwise, only a small group of people can be enriched.

The integrity of China's industrial system can also promote the sophistication of various industries, which is the product of quantitative change and qualitative change, and the historical powers have developed in this way.

Can China preserve the entire industrial chain forever?

Unfortunately, the answer is —

No!!

On the one hand, in the future, as the industrial system is further complicated and complex to the point where it takes two or three billion people to support it, China will inevitably no longer be able to maintain a complete industrial system (the whole industrial chain) as it is now, and can only carry out industrial transfer and cooperation like the United States.

On the other hand, China's population size will shrink.

A worrying fact is that the number of newborns in China has fallen to 10 million in 2021, compared with 140 million in the world. The number of newborns in China has fallen to 7% of the world. According to the marriage rate, divorce rate, number of dinks, etc. in the current society, it is even possible to further reduce it in the future.

It should be known that the main support population of China's industry is the 1970-1990 generation, which is about 20 million to 24 million people per year.

Nowadays, 10 million children a year, this number of manpower deducts those who enter the state organs, enter the army, and also produce agricultural products, and enter the construction site to support the illusion of "infrastructure madness", and the rest is estimated to be difficult to support the industrial system of the "whole industrial chain".

5. Summary

Finally, to sum up:

1. The pursuit of the whole industrial chain is the instinct of industrial countries, and other countries do not want to do it, but they cannot do it.
2. The repression and threats of Europe and the United States force China to engage in a "complete industrial system"
3. The pursuit of a better life by the people of the whole country has forced China to engage in a "complete industrial system"
4. At the current stage, China's volume requires that China must have a complete industrial system, and only when the industry establishes a complete industrial system and realizes localization in key technologies and equipment is the way to truly achieve common prosperity. Otherwise, only a small group of people can be enriched.
5. In the future, with the further complexity of the industry, the further refinement of the division of labor, and the complexity to the point where two or three billion people are needed to support it, China will inevitably no longer be able to maintain a complete industrial system like now, and can only carry out industrial transfer and cooperation like the United States.
6. The shrinking size of the population will make China's industry face serious challenges, and this issue must be taken seriously and vigilantly...