China's economy is facing a third global supply chain "transformation", the export-oriented economy in southern China may face setbacks, while the industrial development of northern China is facing new opportunities.
Recently, globally, the prices of coal, oil, natural gas, and commodities such as magnesium, aluminum, zinc, copper, and nickel have soared, indicating that the problem of "knotting" in global supply chains is still spreading. From sea freight to chips, from automobiles to consumer electronics, from energy supply to basic raw materials, global manufacturing is taking a hit.
More critically, this will not be a temporary phenomenon. The whole of globalization has not yet correctly understood and solved the theory of "knotting" in the supply chain. Especially in the context of the weakening of the dollar system and the turmoil of the US-dominated world trading system, the globalized supply chain based on "refined, just-in-time" is changing to a model that emphasizes "just-in-case".
The development model of the global supply chain is facing major changes, and China's economy is facing major opportunities and challenges for the third "transformation" of the global supply chain.
The export-oriented economy of southern China is facing setbacks, while the industrial development of northern China is facing new opportunities.
Is the economy of the North necessarily not as good as that of the South?
Song Hongbing believes that this is not necessarily true. Only by placing the economic differences between the north and south of China and the problem from the perspective of the global supply chain can we see the original appearance of the problem.
Song Hongbing said that if we carefully analyze the changes in The new China's economic map, we will find that the year 2000 was a crucial turning point.
For the first 50 years from the founding of the People's Republic of China in 1949 until the first 50 years of 2000, the economy of northern China was actually ahead of that of the south. It wasn't until around 2000 that the Southern economy (GDP) surpassed the North for the first time, accounting for 53 percent of the country's economy.
And what happened during the year? That was the bilateral agreement between China and the United States on WTO accession in November 1999. This is the real watershed in the reversal of China's north-south economies.
The real formation of The economy of southern China completely surpassed that of the north, in fact, this will not wait until after 2008.
In 2000, China's economy fully joined the global supply chain system. Labor-intensive industries, mainly for the European, American, and Southeast Asian markets, have begun to have a broader market. All kinds of capital, technology, and raw materials can be more easily pooled in southern China.
The unique business culture of southern China has also seized this opportunity. Coupled with the overall income consideration, the national policy and tax incentives are inclined to the coastal cities near Hong Kong, Macao and Southeast Asia, and the benefits are more significant.
With the global industrial chain taking the lead in connecting with China's economy from Guangdong and Shanghai, under the action of multiple factors, there has been a rapid development of the southern economy.
In 2008, the Southern economy apparently seized a second opportunity – the "expansion" of global supply chains.
From the processing of light industries such as traditional clothing, textiles and small commodities to the electromechanical, electronic, automation, and network information industries, the global supply chain has expanded from the low end of the industrial chain to the middle end of the industrial chain.
Stronger industrial foundation, scientific and technological research and development capabilities, coupled with the sensitivity of business awareness, bold introduction, digestion and absorption, so that many cities in the Yangtze River Delta have gradually found their own advantages in the global supply chain positioning.
At the same time, Guangdong, Shenzhen, and the entire Pearl River Delta are catching up with the "cage for birds" industrial upgrading.
More critically, at this time, with the accumulation and demand of the industry, southern China has also begun to gradually rely on overseas resources to develop the crane chemical industry. Coal and iron ore from Australia, bauxite from Indonesia, oil from the Middle East, natural gas from the United States.
Southern China's dependence on the North for energy and raw materials has also been weakened. Although at this time some labor-intensive industries also began to shift to the central provinces and to the northern cities. However, the combination of most northern Chinese cities and global supply chains is still significantly weak, and they have not found advantageous industries suitable for development.
In the pursuit of a refined production model, global resources, financial flows smoothly, the southern coastal cities have a natural advantage over the north, and thus formed a strong "Matthew effect", resources, talents are converging to the south.
This is the key reason why the south surpasses the north, and even the economy of Shanghai and the Yangtze River Delta surpasses that of Guangdong and the Pearl River Delta.
However, it can be judged that the economy of the North has no chance?
Of course not. At present, we see that with the arrival of the third global supply chain "big change", the geographical layout of the entire industrial chain will change.
The original refined production model has gone to its own opposite. While the entire supply chain is too delicate and fast-moving, it is often too fragile and narrow.
Fragility leads to fracture, and narrowing leads to inner rolling.
Especially in the case of the weakening of the dollar system and the turmoil of the US-dominated world trading system, the original global supply chain based on "just-in-time" has been seriously knotted. The entire industry chain is at risk of possible collapse.
At the same time, the industrial chain that pursues too much refinement and efficiency cannot accommodate a larger market. The population and resources of most countries and landlocked areas of the world are actually marginalized. Such a huge market cannot be integrated and utilized, but it will cause the gap between the rich and the poor to widen and the social division.
This makes the production mode of "refined, just-in-time" more and more unstable, until the entire chain is broken.
The current situation is actually the result of this extreme pursuit of profit maximization by capital, resulting in a broken chain.
It's not just the temporary shock of the pandemic, but the world can no longer stand this fragile and extreme capital system and mode of production.
From sea freight to chips, from automobiles to consumer electronics, from energy supply to basic raw materials, the global manufacturing industry is being impacted, and the supply and demand chain of the global market is facing restructuring
China, and indeed the world, is beginning to have to shift to a model that emphasizes "just-in-case." This will make it possible for the northern economy, which is dominated by heavy chemicals, energy and raw materials, to gain opportunities.
How to seize this opportunity to improve the industrial chain, carry out industrial upgrading, and gain a dominant position or even a dominant position in the entire supply chain system?
For example, the Optics Valley in Wuhan, Hubei, the big data base in Guizhou, the magnesium smelting and processing in Yulin, Shaanxi, the heavy industry and robots in Shenyang, Liaoning, and the cotton spinning industry in Xinjiang...
It can be said that China is vast, and each province actually has its own unique advantages. However, in the previous "just-in-time" global supply chain model, some advantages are difficult to play, or opportunities are not seized. This is the essence of the economic disparity between the north and the south of China.
At present, when the third global supply chain change comes, from the production mode of just-in-time to the just-in-case, both the south and the north must think carefully about how the next development opportunities and layout should be carried out.