Li Yizhong: China's manufacturing costs reach 95% of the US

The "China Import and Export Enterprise Annual Meeting 2015 and China Foreign Trade Top 500 Club Annual Meeting" was held in Beijing from April 26th to 27th. Li Yizhong, member of the Standing Committee of the National Committee of the Chinese People's Political Consultative Conference and the first minister of the Ministry of Industry and Information Technology, attended and gave a speech.

Li Yizhong said that in recent years, China's manufacturing costs have increased significantly, not only higher than Southeast Asia, Eastern Europe and other regions, reaching 90% of the US manufacturing costs, the Pearl River Delta, the Yangtze River Delta is 95% of the US manufacturing costs, and even Individual entrepreneurs go to the US to run textile mills because the cost is lower than at home.

Li Yizhong also stressed that although the cost of manufacturing is rising, the comprehensive advantages of China's manufacturing industry are still obvious. Foreign product orders also have a resurgence. "Our labor prices are high, but overall it is stronger than other countries. We have the foundation, technology, capital, and market. So after comparison, China is better."

The following is a speech record:

Li Yizhong: Leaders, experts, entrepreneurs, everyone!

Under the current new changes in economic development and the new normal, the 13th China Import and Export Corporation Annual Meeting is based on the theme of open economy, new drive and new balance, and it is necessary to discuss new roads and new measures for foreign trade.

I would like to make a few comments on how the manufacturing industry supports foreign trade and foreign trade:

First, the results of foreign trade and foreign trade are hard to come by, and it is necessary to correctly analyze and grasp the current favorable and unfavorable conditions. At present, global economic growth is weak, world trade is sluggish, and foreign trade difficulties are increasing.

Last year's figures were very familiar. The total import and export volume was 26.4 trillion yuan (6.1969, 0.0034, 0.05%), an increase of 3.4% year-on-year. Among them, exports increased by 4.9%, which is not easy. Although the growth rate has dropped significantly compared with the previous years, the global situation is very serious.

The figures for the first quarter of this year were announced. Before that, our analysis goal was to increase by 6%. It was very difficult for everyone to discuss. As a result, the total import and export volume fell by 6% in the first quarter, and this contrast is indeed too big. To complete the goals of the year, the truth is serious.

Therefore, we must analyze the situation, grasp what are the unfavorable factors and favorable factors, enhance confidence, overcome difficulties, adapt to the situation, and play a role.

Second, the world economy is recovering slowly and various uncertain factors are increasing. From an international perspective, the US withdrawal from quantitative easing, the appreciation of the US dollar and interest rate hikes have caused capital outflows in emerging countries. After the US financial crisis, policies such as revitalizing manufacturing, local return, and export multiplication, together with the advantages of resources, have now seen results.

The situation in the EU, the UK and Japan is not so good. In order to get out of the predicament, the opposite loose monetary policy was adopted. Relative to the depreciation of the US dollar, due to the renminbi linked to the US dollar, our exports to the United States and India have increased in the first quarter. However, exports to the EU and Japan have declined. They fell 2.1% and 11% respectively because their currencies depreciated.

The sharp decline in imports in the first quarter was due to insufficient domestic demand, mainly due to the decline in international oil prices and iron ore diving. Although imported iron ore may increase a bit, it is reduced by $63 billion because of price issues. Therefore, imports fell by 17.3%, and it is necessary to analyze the reasons calmly.

From the domestic perspective, the cost of manufacturing has risen, the old power has disappeared, and the new force will be born, in such an alternating period. Energy, raw materials, logistics, land and investment and financing costs, especially labor costs, have continued to rise in recent years. In the past ten years, our labor costs have increased by 2.7%, and manufacturing costs are not only higher than in Southeast Asia, South Asia, and Eastern Europe. Statistics show that 90% of the cost of manufacturing in the United States has been reached, of which the Pearl River Delta and the Yangtze River Delta have reached 95% of the cost of manufacturing in the United States. There are even individual examples of entrepreneurs going to the US to run textile mills because of the cost of doing it in China. Still low.

These factors have indeed led to the relocation of foreign-funded enterprises, and many orders have turned to cheaper Southeast Asia and South Asia. We are in such an alternating period of adjustment structure and transformation. There are some abnormalities in the import and export figures. I think it is not difficult to understand, but also a calm analysis.

The Ministry of Industry and Information Technology has recently conducted research on 5,000 key industrial enterprises. Among the 5,000 households, foreign trade companies accounted for 41%, a decrease of 4.3%. Because the foreign trade was lost, I quit. Among the 2,000 foreign trade enterprises, 60% of the enterprises' orders are flat, not bad. 25% of corporate orders are reduced, with an increase of only 17%. In general, orders are still reduced. This is a key industrial enterprise, and the average enterprise is even worse.

We also need to see favorable factors. Above the Shanghai Free Trade Zone pilot, Tianjin, Fujian and Guangdong Free Trade Zones have been listed, which not only promotes the development of Beijing-Tianjin-Hebei and coastal areas, especially the expansion of East Asia, especially Taiwan, Hong Kong and Macao. Economic and trade exchanges.

The new Belt and Road strategy is being implemented, and 47 countries have become members of the AIIB. The comprehensive advantages of China's manufacturing industry are still obvious, and the resurgence of foreign product orders has emerged. Our labor price is high, but we are more comprehensive than other countries. We have the foundation, technology, capital, and market. So after comparison, it is still good in China.

Second, the advanced manufacturing industry is the material basis of foreign trade and foreign trade, implementing "Made in China 2025", accelerating transformation and upgrading, and providing favorable support for foreign trade and foreign trade. Industrial products accounted for more than 95% of the trade in goods. It is the basis of our foreign trade. In the first quarter of this year, industrial exports increased by 2.9%. Although the range has decreased, it has increased and is relatively stable. Therefore, to maintain the important task of import and export, we need to do some work:

First, to win by quality, and vigorously adjust the product structure to achieve upgrading. China's manufacturing industry is generally at the low-end, for example, clothing, textiles, and daily-use light industrial products account for 43% of exports, and food accounts for 10%. This is the figure of the previous year. Improve quality, optimize varieties, increase green environmental protection elements, and foster competitiveness.

We have a considerable level of equipment manufacturing, machinery, electronics, and information products. According to statistics, 45% of export products, last year's figure is higher, more than 50%. These products are high in technical content and cost-effective. Therefore, on this basis, we will vigorously develop smart manufacturing, further increase the added value, adopt the international standard to allow the market to recognize, and gain wide recognition from the market.

Our weak links are the basic components, components, high assembly and raw material processing and assembly. Therefore, in the future, we must make great efforts in this regard. According to statistics, 60% of components and components were imported 10 years ago. Now the ratio has dropped from 60% to 35%. Of course, there is still a big gap. Only in this way can our products move toward the middle and high end.

Give play to advantages, expand openness, and improve the level of internationalization of manufacturing. The first is to give full play to our advantages and expand foreign investment cooperation. Including rail transit, power, telecommunications, construction machinery and other advanced equipment manufacturing as well as steel and petrochemical products. Although we are surplus, we are not behind. For example, the high-speed rail has already cooperated with 28 countries and regions. In the past few years, it has exported more than 5,000 locomotives.

Construction machinery, for example, has investments in Russia and ASEAN, and has acquired manufacturing companies in some developed countries.

We went out to participate in the infrastructure interconnection of the host country, where we built industrial parks. It is a good experience to drive the export of products through the project.

Huawei, ZTE and China Mobile have established 26 4G networks outside China. We have not gone out of 3G, 4G has international standards, and we have gone out. At the same time of building the network, we took our telecommunications equipment out. For example, our railway and shipping companies have built many major projects in railways, highways and real estate. Showcasing our advanced and efficient construction machinery, this is a machine that is replaced by engineering projects.

We continue to open up the general manufacturing industry and gradually allow foreign capital to enter domestic high-end manufacturing, new materials and new energy. This will attract foreign investment and bring new technologies. Not long ago, I met the president of Shell. He said that he has established a research and development center and a global technical organization in Shanghai.

Deepen the reform of foreign trade and foreign trade, and create new formats and new models. To comply with the general trend of trade liberalization, our country has signed bilateral and multilateral trade agreements with other countries to promote import and export facilitation. E-commerce is not only domestic but also cross-border e-commerce, which has led to the transformation of traditional business models and the extension of manufacturing service to international trade. After the product is exported, the service must be followed by the repeat customer.

The Internet+ is now familiar with the word, and it is also going to land deep roots. The government and relevant departments have changed their functions, reduced the approval and review of our enterprises, and narrowed the scope of approved investment projects. Further implement the financial measures to support foreign trade and foreign trade. Recently, the State Council approved a reform plan for policy banks, which everyone has seen. This clearly defines the approval and positioning of these policy banks, such as the Bank of China and the Export-Import Bank. On this basis, more vitality can be revitalized and the strategic ability of serving the country can be improved.

There is also research, we have so much foreign exchange reserves, we have to lend out. Intermediaries that cultivate laws, financial insurance, and technical consultations guide our companies to go out and prevent risks, and take less detours to improve efficiency.

Through the above efforts, we believe that through deepening reform, integration of industry and trade, integration of industry and finance, and innovation, we will be able to cope with the complicated international and domestic new situation. We must maintain the general trend of opening up to the outside world, give full play to our advantages and overcome various unfavorable factors, and promote good foreign trade and foreign trade.

thank you all!

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