The global trade situation continues to deteriorate. The United States continues to increase the trade frictions and expand the scope of strategic suppression of China. From trade expansion to military, science and technology, and religious culture, U.S.-China relations are likely to suffer historic damages. Since the United States has strategically regarded China as a long-term competitor, China might need to face a poor long-term relationship with the United States.
Maintaining long-term frictions with the world's leading power means that China will face a world different from what it used to know. In the face of the changing situation, China needs strategic adjustment and response.
Anbound scholars believe that based on China's current comprehensive capabilities, established strategies and national interests, some strategies in China may not change easily in the future; these include adhering to long-term globalization, reforms and opening-up and maintaining non-hostile long-term cooperation with developed countries such as the United States and Europe. However, apart from these long-term strategies, in the current complicated situation, is there any measure that China can use within the short-term? We believe that the "Chinese market" is such an important measure and bargaining chip for China to increase its competitive ability in the new international economic situation.
Emphasizing the role of the "Chinese market" is in fact, based on an important judgment, that our world has moved from focusing on a sellers' world of investment and production to a buyers' world dominated by consumption and markets. In the sellers' world, whoever controls the manufacturing has the final say; in the buyer world, whoever has the market space and spending power will be the one who will have determinion power.
As early as 2014, Anbound has already analyzed such an important transformation. In the buyers' world, the most valuable things are not commodities, but the economic aggregate and purchasing power; that means that the decisive power is the total strength of consumption. If China continues to participate in the global market in the future and if it continues to use low-cost competition, the situation it faces in the future will certainly be competitions with the world's third world countries, and it will have fewer and fewer partners and supporters, but more competitors.
How can China solve this problem? In the buyers' world, the concept of "Chinese market" is an important solution and approach. In fact, the concept of the "Chinese market" has clearly been revealed by President Xi Jinping at the 2013 Boao Forum for Asia Annual Conference; it is only the Chinese economic sector has yet to be aware of this. Xi Jinping pointed out at the time that in the next five years, China will import about US$10 trillion of goods, the scale of foreign investment will reach US$500 billion, and the number of outbound tourists may exceed 400 million people. This is a strategic picture that is waiting to be clearly understood by the Chinese government departments and the business community.
With China's economic growth, the "Chinese market" with a population of nearly 400 million has become an important driving force for world economic growth. Statistics show that in the past five years, China's contribution to world economic growth has exceeded 30%. It has also been pointed out that China will import US$ 24 trillion of goods in the next 15 years. In the next 15 years, China is expected to absorb US$2 trillion overseas direct investment, and the total foreign investment will reach US$2 trillion. What does the US$24 trillion import mean? This is a very impressive market space, and it is also the power of the buyers' world that can be transformed into influence. However, within policy research in China, it seems that few people realize the strategic importance of this issue and fail to fully translate it into a national strategy.
The importance of the influence of the Chinese market has already been recognized internationally. Geoffrey Garrett, the Dean of Wharton School, mentioned in his speech on August 25 this year that if a more contemporary way were used to describe China's global influence, that would be the importance of the Chinese market. He also mentioned that there are three iconic U.S. companies - Apple, General Motors and Boeing - that are very different; what they have in common is that China is one of their most important and fastest growing markets. Apple used to see China as a mobile phone component assembly place, but now it considers China as a sales market. General Motors went bankrupt after 2008 and later got out of trouble and returned to profitability; one reason is that it sells more cars in China than in the U.S. Boeing is a legendary name in the U.S. export industry. A large part of Boeing's aircrafts is sold today in none other than China. Garrett stressed that many people still have not realized that China is no longer just a low-cost assembly country but the most important growth engine in the world.
The world's leading economic power, the United States, is the largest market in the buyers' world. Unlike China, the United States has applied the advantages of the buyer's market to the extreme. The United States has extremely high market access quality standards (not tariff standards), stringent market regulation and consumer protection measures. Among all manufacturing, financial, and service industries in the world that wish to enter the United States, even the enterprises that had committed illegality and penalized with hundreds of millions of dollars, they would not be willing to leave the U.S. market; an important reason is that the U.S. has a huge market. In a sense, the strong national strength of the United States is that it can protect its high-quality domestic market. For Trump administration to be able to launch the global trade war, an important bargaining chip for the U.S. is its huge domestic market.
Now, China is transiting from being a "world factory" to the "consumer market", and it should learn from many developed countries in exerting buyers' market as an influential bargaining chip.
In the future, China's concept and actions to participate in globalization should be very different from the past, because it can utilize its buyers' market. While continuing to enhance the manufacturing system as the capability of a major power, China should also study strategies of buyers' market to formulate its own policy and legal system to monitor and protect the domestic market environment and implement various policies and actions centered on the buyers' market.
Final analysis conclusion:
In the buyers' world, China cannot possess a world-class buyers' market, yet still being treated as a losing seller. In the buyers' world, China must make good use of the influence of market space, which is a valuable bargaining chip for China to maintain its long-term strength in the complex international competition in the future.
