China would benefit from Trump’s effort to bring manufacturing jobs back to US

By Hu Weijia Source:Global Times Published: 2016-11-30 0:03:39

US President-elect Donald Trump's recent statement that he would incentivize Apple Inc to bring back manufacturing jobs to the US from China sounds like an eye-raising slogan that lacks practical meaning. While Trump will likely step up efforts to revitalize American manufacturing after he is sworn in, it will be almost impossible for the country to restore its glory as a major manufacturing powerhouse under his presidency.

The last few decades have seen Asia become a recipient of outsourced manufacturing from the US and the EU. East and Southeast Asia now are center stage in global manufacturing, creating a regional cluster of supply chains based on deepened industrial interdependence among Asian countries. As such, the vast majority of Apple suppliers are located in Asia. The US high-tech enterprise assembles its products in China and imports components and parts from other Asian countries, including Japan and South Korea.

Trump can offer incentives to Apple to "build a big plant" in the US in a bid to bring back manufacturing jobs, but the US won't be able to copy Asia's production system. This would certainly drive up manufacturing costs as smartphone components, such as chips, would need to be shipped across the Pacific.

Assuming Apple is willing to bear these economic burdens in a show of patriotism, the question remains whether American workers will want to fill the low-wage jobs brought back from China.

Restoring manufacturing jobs will also result in higher wage costs for companies moving to the US. A recent Business Insider report estimated that iPhones built with only American-made components could retail for as much as $2,000 per unit. China would be delighted if Trump successfully persuaded Apple to make this pricey move, since it would be  easier for Chinese smartphone makers, such as Huawei and Xiaomi, to steal market shares from Apple. Further, suppliers in China could serve Huawei and Xiaomi, meaning Chinese workers wouldn't lose their jobs.

In reality largely revitalizing the US' manufacturing sector is unlikely. All other previous attempts to re-industrialize America failed to achieve the result of bringing manufacturing back to the US. Instead, Washington should encourage investment in high-end manufacturing to consolidate the country's leading position in industries such as IT, aeronautics and space, health care and defense instead of competing with Southeast Asian countries like Vietnam, where even China is transferring manufacturing to take advantage of lower labor costs.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON THE ECONOMY

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