[Source / Author: GuanchaNet Columnist Morning Maple]
After Trump's upgraded tariff measures, many people are worried about the future development of China's manufacturing industry.
In fact, America's blockade of China's manufacturing has already begun. A few years ago, the West was keen on using "China's overcapacity" as a reason to build trade barriers, while China strongly rebutted with "China's capacity benefits the world." The debate even became politicized: in the West, mentioning "China's competitiveness" is seen as helping China "suppress" Western labor rights; in China, mentioning "China's overcapacity" is seen as helping the West suppress China. But both sides overlook the most important point: capacity is China's unique advantage.
Today, China's capacity brings extremely abundant and varied goods, making commodity shortages a distant memory. Although there are still shortcomings such as high-end chips, advanced pharmaceuticals, and civil aviation engines, which are often used by some groups as evidence to criticize China. But the undeniable fact is that the industrial crown once studded with diamonds has been almost completely stripped by China, and more and more former diamonds have become today's glass. China is gradually transitioning from being a "small worker" to a "mounted and disdainful one" in the industrial world. Those who are eager to criticize China can choose to only see the shortcomings and ignore everything else, but Europe and America are already on edge, treating anything and everything as a "survival-level threat" to national security.
China is a latecomer to industrialization: at the end of the Industrial Revolution 1.0, the Chinese were painfully struck by foreign guns and cannons; during the Industrial Revolution 2.0, the Chinese watched the world race ahead in shock; in the second half of the Industrial Revolution 3.0, the Chinese completed the transformation from "sweatshops" to the "world factory"; in the Industrial Revolution 4.0 era, the Chinese unexpectedly found themselves standing at the forefront.
The Industrial Revolution 1.0 was represented by steam engines and railways, achieving physical replacement of humans by machines. The Industrial Revolution 2.0 was marked by internal combustion engines, electrification, and chemistry, truly beginning the era of large-scale industry. The Industrial Revolution 3.0 took electronic, digital, and automated opportunities to begin the initial stage of intelligence. The Industrial Revolution 4.0 empowers through networking, informatization, and AI, unleashing the power of 1+1>2. It also opens up the era of new energy, gradually phasing out the dependence on fossil fuels that began with the Industrial Revolution 1.0. Today, China is far ahead in the field of new energy, and tariff barriers cannot protect the backwardness of Europe and America.
In the field of ICT, people's attention is focused on high-end chips. In fact, chips are deeply rooted in fields ranging from musical greeting cards to AI acceleration cards. Overall, the largest quantity of chips used are still "traditional chips," and China leads absolutely in both production and use in this area, laying a solid foundation for our bottom-up sustainable development.
America has also noticed this issue, with traditional chips produced in China being widely used in various basic working scenarios globally. However, America itself cannot fill the gap in traditional chip production capacity and can only expand bans on exports of high-end chip equipment and materials to China, hoping to delay China's pursuit of advanced levels by increasing the experience and funds required for China to catch up. This may ultimately result in America's self-proclaimed "AI advantage" failing to materialize.
Photo source: CCTV News
However, we now see that in the field of high-end chips, the speed at which pioneers expand frontiers is slowing down, and China's pace of catching up is accelerating. This catching up process is S-shaped: after breaking through a certain turning point, catching up accelerates due to "one leads to all," then slows down again as it approaches the frontier and encounters the same difficulties as the pioneers.
The capacity advantage of a single industry may allow specific enterprises to make big profits, but for the national economy, it is still like trying to clap with one hand. Red flowers still rely on green leaves. America thought it could monopolize the red flowers and "downsize" or "outsourcing" the green leaves, assuming they would be available when needed. But unnoticed, there are fewer and fewer red flowers, and the green leaves are concentrated in China. And to dominate the world, China must be labeled as an enemy, and China's green leaves cannot be relied upon either.
Not only does China have lush green leaves busy competing for sunlight and rain, but it has also formed a full-ecosystem capacity advantage. From steel, chemicals to machinery, digital products, construction, and transportation, China's capacity advantage is comprehensive and profound.
New quality productivity will also become a breakthrough for China's further development. If new key technologies' red flowers can immediately receive "green leaf capacity" support, instant value feedback can be formed. This is the strongest embodiment of "the whole is greater than the sum of its parts." Electric vehicles are a good example. There are several driving forces behind China's explosive development of electric vehicles:
1. China's automotiveization
2. Energy security issues caused by oil shortages
3. Air pollution and decarbonization issues
China's electric vehicles developed on the shoulders of gasoline vehicles. In the gasoline vehicle era, basic car body manufacturing, trim materials, and automotive electricity had already formed supply chains and capacities. After the three-electric (battery, motor, and control) industry was in place, China's electric vehicles bypassed traditional bottlenecks such as internal combustion engines and transmissions, quickly taking off.
China has always been an oil-poor country. Before the reform and opening-up, oil production was enough to meet domestic needs, and there was even surplus for export. Once the economy developed, demand exceeded supply, and since then, China has been the world's largest oil importer year after year. After the great development of automobiles, China's oil security became a major problem. Photovoltaic and wind power help摆脱 dependence on imported oil, and the breakthrough in lithium battery technology provides the foundation for automobile electrification. Tesla also became a useful catfish.
In terms of government policies, major cities restricted traffic congestion and air pollution by implementing license plate auction systems. To encourage electric vehicles, green plates did not require auctions, greatly encouraging buyers. Even though subsidies have now decreased, the government previously provided electric vehicle subsidies. Under this combined force, China's electric vehicles experienced explosive growth.
So far, Western countries (especially Europe) have done similar things, but the development of electric vehicles in the West lags far behind China. Some Tesla users even prefer plug-in hybrids or gasoline cars when asked about their next purchase intentions, rather than full electric vehicles. Part of the reason is that electric vehicles lack ecological support in the West.
National Grid charging station
Electric vehicle owners in China used to have range anxiety. Over the years, charging piles have sprouted everywhere. Except during super travel peaks like New Year’s Day, Spring Festival, Qingming Festival, May Day, and National Day, the charging piles in highway rest areas generally suffice. At gas stations and shopping malls after exiting the highway, there are even more charging piles.
Installing charging piles in residential areas is becoming increasingly convenient, except in old and dilapidated neighborhoods. The awkward situation of throwing a wire from the window is becoming less common. Electricity supply is also becoming increasingly ample, and power outages have become rare events. The installation of photovoltaic and wind power generation has exceeded thermal power generation, and ultra-high voltage and energy storage are solving the fluctuation problems of renewable energy, which is the most fundamental backing for large-scale charging pile construction.
Convenience in charging has become a matter of course in China, and expectations are for even more convenience. In the future, peak travel times should not be hindered by charging. However, this is not a simple matter. Appropriate overcapacity in investment, supply chain, and installation is needed to rapidly scale up during a major development phase, cross the tipping point, and eventually form healthy rolling development.
Firstly, investment. Investment is generally not considered part of capacity, but financing strength can also be seen as broad-spectrum capacity. The West lacks no financing strength, but capital won't act without profit. For issues like the chicken-or-egg dilemma of electric vehicles and charging piles, capital chooses to wait and see. Waiting for a small chicken to grow into an old chicken without finding a solution is still futile, so they switch targets. Capital never stays loyal.
Secondly, power system compatibility is needed. The West developed early with grid construction matching past needs, and although expanded over time, fundamentally, it is unsuitable for further rapid increases in power demand. Electric vehicle charging requires more than just a wire; it demands high-power cables, corresponding circuits need high-power switches and circuit breakers, and insulation and safety standards must also increase. Many older buildings in Europe simply cannot handle such high currents, and the lack of widespread air conditioning is partly due to this, making it even harder to charge electric vehicles.
This hasn't even touched on installation. People in China are accustomed to calling on installation teams at any time, but this is impossible in Europe and America. Installation teams have long work orders, and it takes a lot of time for equipment and materials to arrive. More "industrial-standard" charging stations and installation kits take even longer to arrive.
There are also human factors. The shortage of STEM graduates in Europe and America is an old problem, and international students face immigration restrictions, not to mention they don't necessarily want to stay. The bigger problem lies in maintaining existing teams, especially American technicians and engineers. For the manufacturing sector, the core of the team lies in engineers and technicians, not CEOs and middle-to-senior management.
The rise of America began with manufacturing. American manufacturing absorbed experiences from Britain and Germany. The Industrial Revolution 1.0 was also an era of craftsmanship and apprenticeship. Britain was an outstanding leader of the Industrial Revolution 1.0, to the extent that traces of the apprenticeship system still remain in British education after its institutionalization. Germany was a leader in the Industrial Revolution 2.0, but Germany solved the problem of scaling, standardizing, and rapidly cultivating skilled labor through schools. Germany's vocational school model of theory combined with practice remains influential worldwide in engineering colleges to this day.
Nowadays, American engineers follow the "German route," mostly graduating from schools; technicians follow the "British route," where obtaining an apprenticeship qualification usually requires a junior college (also known as community college, roughly equivalent to a two-year college), as high school graduation is no longer sufficient. In theory, engineers focus on maintaining, improving, tapping potential, and innovating products and processes, while technicians focus on daily operational aspects. However, both the engineering and technician teams face serious problems.
Even the so-called "technological eccentrics" in America are disappearing. In American culture, "technological eccentrics" once represented those strange geniuses who were incomprehensible yet respected. Now, unless these eccentrics can monetize their technology like Bill Gates, Steve Jobs, Mark Zuckerberg, or Elon Musk, they are merely eccentrics, receiving little attention as it is a privilege not to be ostracized.
In the business world, top engineers in large companies are equivalent to vice presidents in rank. There are plenty of vice presidents, along with various senior vice presidents and junior vice presidents, but there are only a few top engineers. Moreover, most of their work involves technical administration, such as setting product and process research directions, industry trends, technical contract negotiations and management, internal and industry technical standards, etc., rarely involving specific technical tasks, and even less likely to be experts when encountering practical problems.
Unlike the overlapping layers of management, every step up the technical ladder is a significant leap and difficult, with countless sacrifices made for one success. If measured by wealth and power, the management ladder is a more accessible path upward. Western culture also emphasizes "leadership qualities," whether managing people or managing money, it is considered more noble than managing things. This makes young engineers hard to resist the allure of the management ladder and abandon deepening their expertise in the technical ladder.
Additionally, the promotion of management teams in America resembles military promotions, emphasizing comprehensive and balanced experience and abilities. One must rotate through different positions such as production, technology, maintenance, supply, and IT support to advance to the next higher position. Given limited time, this means having only enough time to "pretend to understand" each role before moving on. This inevitably leads to amateurism.
Faking understanding harms performance in specific roles and even more so in leadership positions. Professional teams can ensure specifics, but the whole is not simply the sum of the parts. If the guiding ideology of the decision-making leader goes awry, seemingly correct details may not prevent the whole from falling apart. If the leader also has the habit of saying "this I understand best," the harm is even greater.
The other problem with quick rotation is the team's cohesion. Leadership is the core of the team; if the core is unstable, the team will struggle to stabilize, and unstable teams find it hard to achieve great things. An important view in European and American management theories is that the most effective leadership is establishing and enforcing norms; legalism rather than personal rule is the core of leadership ability, which is also the theoretical basis for "outsiders leading insiders." But if laws are effective, what purpose do police serve?
This issue first manifested in European and American militaries. The performance of Israeli forces in the 1982 Lebanon War differed significantly from the previous four Middle Eastern wars. Post-war analysis revealed one of the reasons was the professionalization of the officer corps, which transformed survival-based combat into promotion-driven combat. The amateurism caused by rapid job rotations further damaged the quality of the officer corps and the team's cohesion. Now this problem has spread to the corporate world. The best young technical talents are not committed to their professions; besides a few "unworldly" eccentrics, many who stay long-term in technical teams are those with no hope of promotion.
On the other hand, from a technical management perspective, outsourcing is the shortcut. Spend money when you have it, cut losses when you don't, aligning with the principle of lightweight asset operations. Moreover, if something goes wrong, as long as you fulfill your responsibilities procedurally, the problem becomes someone else's. Engineering design can be outsourced, technological upgrades can be outsourced, maintenance can be outsourced, and even finance can be outsourced. Actually, R&D and product design can also be outsourced. "Our own people" propose ideas, then subcontract the detailed design and engineering implementation to "professional teams." But anyone who has done their own home renovation knows that if outsourcing is chosen because of ignorance, the deviation from the original plan is inevitable, the question is how much the deviation is.
As American de-industrialization deepens, product and technological development slows down. Opportunities are scarce, and interesting technical jobs are outsourced, which greatly dampens young engineers' motivation to focus on technology. It's better to transition to the management ladder early. Even if they stay in the technical team, they need to rotate positions regularly to "increase exposure" to enhance promotion opportunities. These factors exacerbate the amateurization of the technical workforce. The main problem with the skilled workforce is not the transfer of excellent talent to the management team but the workforce gap.
American manufacturing combined experiences from Britain and Germany when it rose, but its most important contribution might be the standardization of industrial process management. This includes highly decomposing industrial processes and meticulous procedural management, with Ford's assembly line being a concentrated representation. Nowadays, this is embodied in standardized operating procedures (SOPs) for operational standardization.
In American companies, SOPs are ubiquitous, and everyone must undergo compliance training before starting work. SOPs not only manage all production process details but also have standard actions for general operations like operating valves/switches, transporting materials in production areas, and operating computer-controlled systems. Various emergency situations are also handled according to SOPs (at this time, they are also called EOPs).
This approach ensures high standardization and predictability, and there is no need to improvise when faced with any situation. Once any problem arises, the first step is to check compliance; most issues can be traced back. Only then can we discuss whether the SOP (or other procedures) is reasonable.
While the original intention of high standardization was to ensure "anyone can do it equally well," the deification of standardization stifles improvement and innovation, and "avoidance of responsibility" thinking further leads to universal rigidity. Skilled workers can become proficient in standard operations, but they fear and are bewildered by anything beyond routine and new things, causing a gap in the skilled workforce.
The amateurization of engineers and the gap in skilled workers have become bottlenecks for America's reindustrialization and capacity expansion, particularly evident in TSMC's Arizona factory, but the problem permeates the entire industrial sector. This is not a problem that can be solved by throwing money. Introducing foreign talent is like scratching an itch through clothing; even the most experienced foreign STEM talents face issues of corporate culture, technology regulations, and technical alignment, and introducing skilled workers faces larger language and cultural barriers.
In terms of capacity, slight shortages are beneficial for capital. Prices remain firm, production remains stable, and capacity is fully utilized. The problem is that once demand increases, expanding capacity triggers a "long-tail effect" throughout the supply chain (especially involving materials and personnel), requiring a long time to truly take action. Often, it's too much trouble. If something more important comes up, action stops altogether.
Compared to this, China is always ready with material and human resources, waiting only for the right target to appear. This is particularly advantageous in the era of transformation. Once conditions for new quality productivity mature, it can rapidly expand and seize the high ground. Photovoltaics, wind power, and electric vehicles are all examples. Now, the West fears most is that China will also do the same in chips, robotics, and AI.
New quality productivity is the high ground everyone is vying for. The Western approach is to "find shortcuts"; once the path is found, they can climb up. China's approach is more like "building a human ladder," using systemic power to directly climb the high ground through brute force. Combining the found shortcuts, the climbed high ground is not just one or two but the entire plateau. This is actually America's successful experience after World War II.
During World War II, America accumulated massive capacity and logistics advantages, and the research team was like a highly honed, well-oiled machine, poised for action. The talent introduced from Germany and Britain was important, but compared to America's local talent and material conditions, they were catalysts and reactants. Without a catalyst, spontaneous reactions can still occur. After a quantitative change leads to a qualitative change, America can also produce its own catalysts, as evidenced by America's technological development in the 1960s and beyond. And this is exactly what is happening in China now.
Although accepting a lot of external information, the development of America's atomic bomb was led by American Oppenheimer.
However, China's capacity advantage also lies in our long-term investment in heavy asset projects.
The establishment of new quality productivity often requires heavy assets. Steel plants, chemical plants, and auto factories are heavy assets, and now chip fabs, photovoltaic farms, and ultra-high voltage are also heavy assets. This is a hard-to-cross threshold, determining that emerging countries like India and Vietnam find it difficult to cross the first hurdle of heavy assets, ultimately determining the "ceiling" of "India's rise" and "Vietnam's rise" in the foreseeable future.
In fact, this was once Western China's design, but China insists on "concentrating efforts on major tasks," breaking the cycle of "investment-construction-benefit-reinvestment." China is also one of the few places in the world with蓄势待发的资金、人才和物资. This means that once a technical bottleneck is broken through, thousands of troops will rush across, quickly forming new capacity advantages.
America is particularly worried about the emergence of the same new "catalyst" technology in China, so it is desperately trying to choke off chip manufacturing, but America's lead is unsustainable. Electric vehicles were once America's leading project, but now government subsidies are phasing out, and market intentions are following suit, meaning Tesla still depends on subsidies.
On the contrary, China's overwhelming advantage in electric vehicles is most evident after government subsidies have phased out, still maintaining strong competitiveness. This is not only due to the capacity and competition of electric vehicles but also the support of "green leaf capacity." Currently, China's industries are troubled by fierce competition, but overall, the full-ecosystem capacity advantage is China's precious wealth; don't misunderstand it.
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