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The life service industry will continue to improve, and the producer service industry will rise strongly, which will largely offset the impact of the slowdown in manufacturing growth, while continuing to enhance the status of the service industry in the overall economy.

In recent years, the phenomenon of some manufacturing industries in the mainland migrating overseas has been widely concerned by the market, and the trade friction between China and the United States in the past year has made it a matter of concern to the market.

But this relocation is not necessary to think so terrible. This is because:

First, the speed and scope of manufacturing relocation is not as fast and large as many people think;

Second, the rise of high-end manufacturing after the relocation of low-end manufacturing;

Third, the slowdown in manufacturing growth was followed by an acceleration in the development of the service sector.

It should be recognized that industrial migration is not only the natural law of world economic development, but also the driving force of global economic growth and the engine of economic upgrading. There have been five large-scale global industrial migrations in the modern world economic history.

The first occurred in the second half of the 19th century to the beginning of the 20th century, when the industrial revolution led by the British steam engine and spinning machine was introduced into the European continent;

The second time occurred in the 1930 s and 1940 s, when the American power, steel, chemical, railway, and aviation industries rose, and the world manufacturing center moved from Europe to the United States;

The third time was seen in the 1950 s and 1960 s, when the industrial structure of the United States was upgraded, and traditional industries such as steel and textiles were relocated to the Federal Republic of Germany and Japan;

For the fourth time, in the 1960 s and 1970 s, the Federal Republic of Germany and Japan transferred low-value labor-intensive industries such as textiles and electromechanical industries to the lower-cost Asian "Four Little Dragons" and some Latin American countries;

For the fifth time, from the 1980 s to the 2008 global financial tsunami, the "Four Little Dragons" in Asia and Japan, Europe, and the United States moved labor-intensive industries and some capital and technology-intensive industries to mainland China and other developing countries.

The ongoing migration of some manufacturing industries in mainland China to Southeast Asia, South Asia and African countries can be regarded as the sixth industrial migration in modern world economic history.

On the one hand, the above brief history of global industrial migration shows that the migration of some manufacturing industries from the mainland to overseas is an inevitable phenomenon at the present stage of the development of the mainland and the global economy, and on the other hand, it also means that the relocation does not indicate that the mainland will lose its status as a manufacturing and economic power.

Don't you see, the leading countries of the first five industrial migrations have migrated traditional industries, but their own development has not stopped, but has been replaced by emerging industries, that is, the rise of high-end manufacturing and service industries, so it is still a developed country with a high degree of economic development. After the third industrial migration more than 60 years ago, the United States is still the world's economic leader. Other economies such as the United Kingdom, Germany and Japan after decades or even hundreds of years of industrial migration still rank among the world's top five in terms of scale and quality..

As the country with the largest population, the third largest land area and the longest cultural duration in the world, China has created the largest economic growth miracle in human history in the past 40 years. Of course, the relocation of the mainland manufacturing industry is underway, and this is only a prediction at present. But the three trends mentioned above make us confident that this prediction will become a reality.

First of all, the speed and scope of manufacturing relocation is not as fast and large as many people think. In terms of speed, between 2008 and 2018, with global trade growing at an average annual rate of 2.4 per cent, mainland exports grew at an average annual rate of 6.3 per cent, meaning that not only did mainland exports grow, but they grew 3.9 percentage points faster than global trade.

In turn, the share of mainland exports in global exports rose from 8.9 per cent in 2008 to 12.9 per cent in 2018, which means that instead of falling, the share increased by 4.0 percentage points. This clearly shows that the speed of relocation is not as fast as many people say. The reasons are as follows: first, compared with the mainland, these Southeast Asian and South Asian countries have small economic volume and weak manufacturing capacity, and there is a certain limit to the amount of industrial relocation they can absorb; second, the existence of complete and strong industrial chains in the mainland makes it really only the middle and low-end industries with short industrial chains, such as clothing, shoes and hats, furniture, etc., and the migration of some electronic information products is only limited to OEM trade, therefore, the scope of the relocation industry is limited.

Secondly, the rapid rise of the mainland's emerging manufacturing industry will largely offset the impact of the relocation of low-end industries on the entire manufacturing industry and the economy, thereby maintaining the mainland's status as a manufacturing and economic power. Eight strategic emerging industries, namely, new generation information technology, energy conservation and environmental protection, biology, high-end equipment, new materials, new energy, new energy vehicles and digital creative industries, are booming in the mainland. Whether it is efficiency, efficiency or multiplier effect of these industries to stimulate economic growth and support the status of manufacturing and economic powers, they are incomparable to low-end traditional industries such as clothing, shoes, hats, and furniture. These high-end emerging industries are developing fast, and even if the low-end industries move out quickly, they are not afraid. The manufacturing industry and economy of the whole mainland will still grow at a medium-to-high speed, with higher quality of growth and a stronger position in the world economy.

Many people ask why the mainland manufacturing industry has moved overseas from the economically developed Pearl River Delta and Yangtze River Delta instead of moving inward to the central and western regions where labor costs are also lower? There are two reasons: first, although the labor cost in the central and western regions is lower than that in the east, it is more than twice as high as that in Southeast Asia, South Asia and Africa. Compared with Southeast Asia, South Asia and Africa, the central and western regions have no cost advantage; second, the central and western regions are also marching into emerging industries, and the development goal is emerging industries rather than low-end traditional industries, therefore, the new industries that have moved inward from the east are favored, while the inward migration of low-end and middle-end industries is also welcome but not expected and won. A look at the development plans of the development and reform commissions of the central and western provinces can be seen. This shows that the relocation of middle and low-end industries will not cause a significant slowdown in the growth of the manufacturing industry in the mainland, nor will it stop the pace of industrialization and modernization in the central and western regions.

Thirdly, the development of the mainland's service industry is accelerating, with an average annual nominal growth of 13.1 per cent in the past 10 years, exceeding the industrial growth by 4.3 percentage points. However, its proportion in GDP is only just over 50%, and there is still a big gap with the level of 70% to 80% in developed countries, indicating that it will continue to grow at a high speed in the future. The life service industry will continue to improve, and the producer service industry will rise strongly. This will largely offset the impact of the slowdown in manufacturing growth, while continuing to enhance the status of the service industry in the overall economy, and promote the mainland to become a modern economic power with both manufacturing and service industries.

(Source: First Financial)