Under the great changes unseen in a century, will Vietnam and India replace China and become the "world's factory"?
In recent years, the economies of Vietnam and India have shown strong growth momentum. The International Monetary Fund predicts that Vietnam's economic growth will reach 6% in 2022, ranking it as one of the fastest growing countries in the world. In 2015, India surpassed China for the first time to become the world's fastest-growing economy. Since then, India has still maintained a high level of economic growth. In 2019, India surpassed France and the United Kingdom with a revenue of US$2.85 trillion, rising to become the world's sixth largest economy after the United States, China, Japan, Germany, and the United Kingdom.
The brilliant economic data of India and Vietnam have triggered a new round of concerns and discussions from all walks of life about the transfer of China's manufacturing industry and changes in the distribution of the value chain.
Neither Vietnam nor India can completely replace China's status as the "world's factory" in the short term. One of the key factors is that China has a strong steel industry and modern manufacturing industry supported by the steel industry.
In 2015, India's crude steel output was 89 million tons, officially surpassing the United States to become the world's third largest steel producer. In 2018, India's crude steel output was 106 million tons, surpassing Japan for the first time and becoming the world's second largest steel producer. In 2021, India's crude steel output was 118.1 million tons. Although it is far from China's 1.0328 billion tons, it is indeed the second largest in the world.
According to India’s steel plan, India’s crude steel production capacity will reach 300 million tons by 2030. In India's steel consumption structure, real estate and infrastructure account for about 60%, and engineering manufacturing accounts for about 22%. It is predicted that India's steel consumption will reach 230 million tons by 2030, but per capita steel consumption is expected to only rise to 158 kilograms by then, which is only equivalent to China's consumption level in 2002-2003.
Judging from India's current steel production and its steel production in the next ten years, it is actually not enough to support a strong manufacturing industry to meet future market demand in Europe and the United States. From the perspective of steel varieties, its low-end steel varieties are not enough to match the future mid-to-high-end manufacturing industry, and therefore cannot occupy the high-end of the global industrial chain.
Vietnam’s crude steel output in 2021 was 23.6 million tons, ranking 12th in the world. In 2021, Vietnam's steel exports to the United States increased 4.5 times, reaching 1.05 million tons; exports to Belgium increased 7 times, reaching 860,000 tons; exports to Italy increased 4.5 times, reaching 550,000 tons. At present, European and American countries are trying to transfer part of the supply chain from China to Vietnam, which is also an important reason for Vietnam's crude steel production to continue to rise in recent years. However, it is obviously unrealistic to rely on 23.6 million tons of steel to meet the product needs of European and American countries for related supply chains.
China is the only country in the world that has all industrial categories of United Nations . A complete industrial chain system, huge market advantages, and rich human resource reserves provide favorable conditions for the development of mid- and high-end manufacturing industries. China has been the world's largest manufacturing country for 12 consecutive years, and China's steel production has ranked first in the world for 26 consecutive years. China has become a very important trading partner of more than 100 countries and has become the center of the global supply chain.
Steel is the foundation of manufacturing. Without a strong steel industry, there is no strong modern manufacturing industry, and it cannot become the center of the global supply chain.
China’s economy is climbing to the top of the global food chain, and the global mid-to-high-end steel field is also realizing a shift in strength. China has achieved historic breakthroughs in more and more mid-to-high-end steel fields and is creating a broader market on a new track. market space. China no longer encourages low-end steel exports. Instead, it develops mid- to high-end steel to borrow cars to go on the road, borrow ships to go to sea, and take advantage of opportunities to fly to the sky, thus giving steel a higher technological content and greater economic value.
Taking the car that can best drive economic growth as an example, in 2021, China's car exports exceeded 2 million units, doubling the previous year, achieving a historic breakthrough; especially on the new track, the export of new energy vehicles is even more dramatic. Explosive growth, a year-on-year increase of 304.6%. Behind this explosive growth is China's powerful steel industry.
Standing at the new starting line in the post-epidemic era, China, India, and Vietnam are injecting strong growth momentum into the global economy. However, it is unrealistic for European and American countries to completely replace China's "world factory" status with Vietnam and India through the transfer of global supply chains in a short time.
