"New Mercantilism" Attacks Where Foreign Trade Goes

At present and for a period of time to come, we must strive to create a favorable environment for the development of foreign trade, improve various policies and measures for stabilizing external demand and promoting domestic demand, and ensure the stability of policies such as the exchange rate of RMB and export tax rebates, strengthen policy expectations, and promote foreign trade in a step-by-step manner. Change in the way of growth. At the same time, we must vigorously implement the “going out” strategy and change the backward situation in which Chinese companies only make products and do not make markets.

Recently, the international community has clamored for China's "new mercantilism" argument to rise higher than a wave. The initiator is Paul Krugman, a prominent American economist. In December 2009, Paul Krugman published an article entitled "Chinese New Year," stating that China's "mercantilism" has reduced the GDP of other countries by about 1.4 percentage points. According to the United States’ share of world GDP, and 1 percentage point of GDP equals 1 million jobs, the United States has lost 1.4 million jobs. A few days ago, in an article entitled “Getting China,” it claimed that, given China’s undervalued exchange rate to maintain its trade surplus, the United States should list China as a “currency manipulator” and impose additional tariffs on Chinese imports, eventually forcing The appreciation of the renminbi. In February this year, the United States "Christian Science Monitor" published a report titled "Be careful about your flanks, America! The article said that merciless "mercist" China is fleeing the United States from the flanks, and the outreach is so effective that it has jeopardized the United States' economic, financial, and political independence.

The Chinese economy facing the attack

The so-called "mercantilism" refers to an economic theory and policy system in which the period of primitive accumulation of European capital represents the interests of commercial capitalists. This theory and system believes that only money is the true wealth of a country. Having a lot of wealth is the true symbol of a country’s prosperity and strength. Profits are the result of buying and selling in exchange. The gains of one side of domestic trade are only lost by the other and cannot increase their wealth. Therefore, in order to get rich, apart from mining gold and silver, the development of foreign trade is the best way to increase wealth. In carrying out foreign trade, we must adhere to the principle of selling more and buying less and maintaining a trade surplus.

At present, China has become the world's largest trading nation, and exports have accounted for 9.8% of global exports. It took us only 9 years to reach this proportion. It took 24 years for Japan to account for 4% to 10% of global export share, and Germany spent 16 years. The international market share of Chinese-made products has expanded rapidly during the past nine years, and it is almost everywhere, which has caused trade frictions and conflicts to be inevitable. However, the western countries led by the United States have attacked the so-called “new mercantilist” in China, and it is ulterior motives to comprehensively contain Chinese manufactured products globally. Fundamentally speaking, it is a strategic consideration for its strategy of promoting economic recovery and maintaining its strong economic position.

In order to get rid of the serious impact of the international financial crisis, the developed countries such as the United States and Europe proposed to “reinvigorate the real economy” and began a high-level “industrial return” through the development of new industrial sectors and the transformation of traditional economies into “green economies”. In other ways, from the high end to the real economy market. At the same time, developed countries, through the implementation of a “low-carbon economy”, brewing measures such as levying carbon tariffs on products from developing countries such as China and coercing their currency appreciation, seek to reduce the cost advantage of Chinese products and reduce the cost advantages of Chinese products. Increase the pressure of industrial transformation, destroy the "timeline" of industrial development, and disrupt the layout of the entire national economy. Therefore, China’s external pressures at this stage have been significantly increased, and the tasks of structural adjustment, market expansion, and balance promotion have been superimposed on each other and are very arduous.

How to deal with the pharmaceutical industry

As far as China's pharmaceutical industry is concerned, after more than 30 years of development, it has formed a relatively stable dependence on foreign trade, which mainly relies on the export of extensive low value-added products. In 2009, China's pharmaceutical product exports once again reached a record high of US$32.9 billion. Low value-added products such as bulk APIs, medical dressings and consumables accounted for more than 60% of China’s total pharmaceutical exports. Taking bulk bulk drugs as an example, it has accounted for more than 40% of the global export volume, and almost together with India, it has controlled the international API market. Since China's manufacturing of pharmaceutical products is usually a low-priced brand and has no independent brand, the medical field has also become one of the hardest-hit areas for international trade to China.

Faced with the intensified attacks in the West, where does the pharmaceutical industry go? Some people have suggested that the appreciation of the renminbi and the introduction of low-carbon tariffs are not a bad thing. The excessive export of China's "two high-owned and one-funded" products can only be used at the expense of the environment in exchange for meager foreign exchange. The time has come to realize industrial restructuring. Under external pressure, We do not follow the trend. This point of view sounds reasonable, but the key to the problem is how to control the rhythm and strength of China's pharmaceutical industry upgrade, and minimize the resulting costs and a series of negative effects that may occur.

We know that of the approximately 40,000 companies engaged in export business in the pharmaceutical industry in China, most of them are SMEs with low bargaining power or even no bargaining power. If renminbi appreciates too quickly, it will directly exert a strong impact on these vulnerable companies. Enterprises will inevitably face a sharp decline in profits, even serious losses and bankruptcy. In the current circumstances, if the value of the renminbi is overvalued or overvalued, the end result will probably be that it is not only impossible to optimize the structure, but it will lead to aggravated structural problems. In the pharmaceutical industry, we are faced with the dual task of “catch-up” and prevention of “catch-ups”, that is, preventing the international market share of comparative advantage products from being handed over to others and providing me with economic benefits as long as possible under the international division of labor system. And ensure that the employment of the 1.6 million labor force in the entire industry is stable. At the same time, we must increase investment and launch new rounds of competition with developed countries such as Europe and the United States and India and other newly industrialized countries. We must enter the high-end product and high-end markets at a faster pace, and open up sustainable development space for pharmaceutical foreign trade and industrial development. The substantial exchange rate adjustment will seriously disrupt the entire pharmaceutical industry's strategic development process. In addition, from the perspective of industrial organization, the exit of several sub-industries in an industry must be set in advance to clear the exit route, and a reasonable timetable should be set. If the withdrawal is too rapid, it will be counterproductive.

From this point of view, promoting structural adjustment and ensuring comparative advantage are two aspects of a problem. We must take an overall look at coordination, be complementary to each other, and must not neglect one side. At present and for a period of time to come, we must strive to create a favorable environment for the development of foreign trade, improve various policies and measures for stabilizing external demand and promoting domestic demand, and ensure the stability of policies such as RMB exchange rates and export tax rebates, strengthen policy expectations, and increase the confidence of the majority of companies. To promote the transformation of the growth mode of foreign trade in a step-by-step manner. At the same time, it is necessary to vigorously implement the “go global” strategy, change the backward situation in which Chinese companies only make products and not market, encourage and support qualified companies to carry out “green space investment”, equity investment and overseas mergers and acquisitions, etc. in order to obtain internationally renowned brands. , First-rate technology, marketing network and R&D resources to enhance international competitiveness. In response to the unfavorable situation of the rise of international trade protectionism, on the one hand, we must strengthen early warning of industrial damage and take precautions. On the other hand, we must make overall use of political negotiations, legal defenses, WTO dispute settlement mechanisms, and actively play an important role for business associations. Good job.