New Forms and Patterns of International Division of Labor under Network Economy

The Impact of International Industrial Division of Labor Pattern on China's Economy and Countermeasures

[Abstract] International production network is the highest form of development of international industrial division of labor. In the international production network, transnational corporations play a central role. As the international industrial division of labor develops in depth, the international production network continues to deepen, providing a rare development opportunity for China's economic development. But passive, excessive dependence on the international production network of transnational corporations is not our best choice, China's economic development as well as the best choice for industrial development is the model of self-sustaining development, excessive inflow of foreign direct investment will curb the host country's economic development potential to play, and will undermine the foundation of self-sustaining development.

I. The latest development of the international industrial division of labor pattern

At the beginning of the new century, the international industrial division of labor to the deepening of the international production network, China has become the preferred place. International production network refers to *** with the participation of a particular product or service manufacturing process of enterprises in different countries to form the international division of labor network. In this network, transnational corporations (TNCs) play a central role. They will decompose the manufacturing process of industry or service, and according to the different production stages or functions on the different requirements of production factors and technology, as well as different areas of cost, resources, logistics and market differences, within the global scope, the most efficient regional configuration, in order to obtain the maximum benefit.

International production network is the highest form of development of international industrial division of labor. At the beginning of the new century, the international production network has been deepening. This is mainly manifested in the following three aspects:

First, in the manufacturing industry, the international production network continues to expand rapidly. 2001-2004, the United States of America's industrial transfer increased very quickly, the transfer of the purpose of the countries and regions are Mexico, China, India and other Asian countries and regions. According to a survey conducted by Cornell University, from January to March 2004, 255 firms shifted out of the United States. Of these, 69 moved to Mexico, 58 to China, 31 to India, 39 to other Asian countries and regions, and 35 to Latin America and the Caribbean. Compared with a similar study conducted in 2001, when only 25 companies moved to China, in fact, the changes occurring in the United States are only part of a new round of global industrial transfer, China will be the largest industrial transfer destination, will attract 1/3 of the global industrial transfer.

Secondly, in the service industry, high-value-added service subcontracting activities have begun to be active. In recent years, some high-tech multinationals have begun to transfer their high-income, high-value-added occupations overseas. These jobs include the design of integrated circuits, engineering, sample production, testing, consulting, medical diagnostics, statistical analysis, automotive and aeronautical design, computing and design, and pharmaceutical and nanotechnology research. It was due to the shift of these types of jobs that in 2003, the unemployment rate for highly skilled workers in the United States began to reach unprecedented levels. For example, the unemployment rate for electrical engineers reached 6.2 percent, the highest level in 20 years.

Third, in research and development, a new wave of internationalization has begun to emerge, driven by the huge differences in wage rates for researchers and developers. This is a bit like the internationalization process in manufacturing, and involves industries that include mainly new and emerging industries, such as microelectronics, biotechnology, pharmaceuticals, chemicals, and the software industry. Garter estimates that by 2005, 10 percent of U.S. technology development will have moved offshore. Another study estimates that by 2008, 5 percent (about 270,000) of the world's research and development workers will come from the low-cost regions of India, China and Eastern Europe.

The above analysis is also confirmed by our own data. For example, FDI attracted by the country has been growing since 2001 and crossed the $60 billion mark, while international FDI flows have declined continuously in recent years. At the same time, China has become one of the preferred locations for research and development bases of global multinational corporations, with as many as 700 research and development organizations already established.

Second, the deepening of the international production network for China's economic development provides a rare opportunity for development

First, the deepening of the international production network for the adjustment of China's industrial structure, as well as the mode of economic growth from over-reliance on capital and natural resources and environmental pollution at the expense of the quantitative expansion to rely more on technological advances and product quality improvement of the intensive transformation provides a rare opportunity for development. development opportunities. Accompanying this international industrial shift are more opportunities for high value-added investment in manufacturing, services, and research and development. This means advanced technology, capital equipment, and developed countries, or even the world market marketing network to bring in.

Second, the opportunity is rare. This kind of international industrial development opportunities are not any country in any period can be encountered and obtained, because, it has a strong instability. This is mainly manifested in the following three aspects:

1) The establishment and development of international production networks, especially in East Asia, has been nurtured in a peaceful and stable environment for decades. However, it is highly susceptible to disruption by major events, such as large-scale wars.

2) In terms of the impact on the home countries of TNCs, it is also very uncertain. Developed countries are strongly skeptical and critical of the development of international production networks. For example, the adjustment of the international industrial division of labor has caused heated debates within the developed countries. Many people worry: "What will the developed countries do in the future if even the high-paying jobs are transferred to other low-wage countries?"

3) The production network is also unstable in terms of its impact on host countries. Developing countries and regions in the international production network are not satisfied with their current position and want to move up. For example, countries engaged in labor-intensive production activities hope to move up to capital- or technology-intensive activities one day. Such upgrading would pose a great challenge to transnational corporations (TNCs) engaged in industrial relocation and the building of international production networks. It is therefore difficult to judge how long and to what extent such international production networks can be sustained. It is necessary for our country to make full use of this opportunity in the spirit of striving for the best.

Thirdly, this network is conducive to China's rise, and more conducive to easing the strong impact of China's rise. For example, the introduction of technology. If the traditional form of technology introduction, many technologies may not be introduced into China at all: on the one hand, multinational corporations are reluctant to transfer their more advanced technologies and products, and on the other hand, the governments of developed countries also restrict China's technology imports for various reasons. However, if it is the investment of transnational corporations, especially the transfer of industries carried out by transnational corporations, then such technologies can enter our country, and it is easier to get the approval of the home countries of transnational corporations. For example, it is hard to imagine that the world's most advanced 0.12-micron chip production technology will enter our country in the form of technology import. Another example is in exports. Although in China's export growth, the contribution from multinational corporations and processing trade brought about 60%, China's exports in the world market has become a target. After joining the WTO, especially in the last two years, reports about our exports being subjected to anti-dumping and special safeguard measures restrictions are almost daily. In the world, one out of every six anti-dumping cases is against our country. Under these circumstances, we can imagine that if all of our exports are produced by domestic enterprises and all come from general trade, the external export situation faced will be even more severe, and, it will be difficult for our exports to expand on a large scale.

On the other hand, we should also be soberly aware that passive and excessive dependence on the international production network of multinational corporations is not our best choice.

Firstly, the transfer of industries by multinational corporations cannot be closely linked, which may easily cause fluctuations or interruptions in local industries and thus economic development. For example, due to the rise in production costs, led to the multinational corporations manufacturing activities to other countries and regions to further transfer, but, at this time, the local high-level value-added and marketing activities have not been cultivated, or the multinational corporations of high-level value-added activities have not been transferred to the formation of the entire economy and the manufacturing industry in the process of the development of the phenomenon of "disconnection or interruption", caused by the great fluctuations in economic development. The development of the huge fluctuations in economic development.

Secondly, the corresponding manufacturing and R&D capabilities built up by the transfer of manufacturing capabilities and R&D activities of multinational corporations are fragmented and mismatched, making it difficult to organically form an integrated whole and create an overall national competitive advantage.

Thirdly, economies developed in this way are very much followers. The vast majority of technologies and products are formed through the introduction of fewer creative things. And with the existing technology and product paths, it is difficult to surpass the developed countries and really provide fresh blood for the development of human science and technology, as well as management and marketing culture.

Third, make full use of the opportunity to deepen the international industrial pattern, and promote the self-sustaining development of China's economy

As a large developing country, China's economic development, as well as industrial development, the best choice is the self-sustaining development mode. It is always centered on cultivating and promoting the growth and expansion of national enterprises. In terms of opening up to the outside world, relaxing or strengthening control over the activities of transnational corporations (TNCs) and their foreign direct investment (FDI) is only a means to that end. Thus, the entry of TNCs and their FDI should be limited to the extent that it does not jeopardize the growth of local enterprises; at the same time, TNCs are only a supporting actor in promoting the development of local enterprises, not the other way around. FDI inflows that go beyond these limits will stifle the realization of the development potential of the host economy and undermine the foundations of self-sustaining development. Conversely, if FDI involvement is moderate, TNCs can contribute to the growth of local firms and to the realization of the goal of economic self-reliance.

First, we must fully and effectively utilize the opportunities presented by this development of the international industrial landscape to promote the development of China's manufacturing and service industries, as well as research and development. Our present pattern of reform and opening up is the envy, or even jealousy, of many countries, and is hard-won and needs to be cherished and protected. We must not cut ourselves off from the close ties we have established with the world economy.

Secondly, we cannot develop automatically by relying entirely on participation in international production networks and joining those of multinational corporations. Instead, we must insist on self-sustaining development and vigorously encourage and support the development of domestic enterprises and industries.

(1) Appropriate protection of the domestic market. Without the protection of the local market, there is no space and opportunity for the unique development of local enterprises, reducing an important source and platform for the competitive advantage of local enterprises. The view that there is no need to protect local markets under the conditions of globalization is wrong and harmful. In the context of WTO accession, we need to develop new ways and policy instruments of market protection permitted by WTO rules. For example, we can provide the domestic market of different industries in a targeted manner through a better government procurement system, turning market protection into targeted market demand. Another example is that we can construct an invisible market protection network through technical standards, safety standards, environmental protection standards and national standards.

At the same time, as the traditional trade or production protection is fading out, we need to innovate and open up government policy space in the trade or exchange of products, as well as in stages and functions outside the production field. For example, in the pre-competitive field, or in the external environment of enterprise growth. Such as human resources, infrastructure to maximize the socialization of investment in enterprises, so as to achieve indirect subsidies and support for enterprises. More importantly, it is necessary to promote enterprise innovation and technological upgrading to form a kind of national innovation engineering and strategy. Only in this way can we carry out the organic integration of local industries or manufacturing industries, as well as breakthroughs and upgrades from the low-cost production stage.

(2) Actively promote the improvement of market mechanism. The construction of a market economy has been the direction of our reform and opening-up efforts for more than 20 years, and it is also the most crucial factor and link in determining the prospects for the development of our economy as a whole. As an economy in transition, we still have a long way to go in this regard. On the one hand, the development of private enterprises has long been suppressed, while the reform of state-owned enterprises has not yet been finalized; on the other hand, the opening up of the market and its deepening integration into the global economy have also posed more and more challenges to the construction of our market mechanism and the development of the market economy. For example, in China's market, in addition to the regional segmentation caused by the coordination between the central government and local governments, differences in interests and mutual games, there is also industrial and product fragmentation caused by different multinational corporations as well as the dislocation, independence and isolation of different functions, such as manufacturing, research and development, and marketing. These have greatly limited the formation of the overall market and the realization of economies of scale in China. These require the integration of market forces. Only innovation on top of many different systems can break through and stand on its own .

(3) consciously and consciously guide the role of the market and market mechanism. Even when the market system has been fully established and is working well, we need to provide some long-term, strategic guidance and pull to the operation of this mechanism. For example, through military procurement, or government procurement in the form of proposing new high technology and high technology products, so as to subsidize, guide and pull the direction of the development of the whole industry and market. Or the market potential products and technologies into the government or military procurement list, to provide a large amount of funds, a considerable scale of the market to promote or guide the direction of the development of the entire industry, pulling the development of local industries. This is a common practice in the development of many high-tech industries in the United States.

In short, under the open conditions, the key to realize the organic integration between China's industrial development and the international production capacity transferred by multinational corporations is to form a new synthesis and development at a higher level on the basis of independent innovation. This is also the core connotation of the self-reliant development model in the new international environment.