General

Has Musk become a super contact in Sino US trade relations? Musk's 44 hour trip to China was very tight and full of dry goods. He was received by Chen Jining, member of the Political Bureau of the Central Committee of the CPC and secretary of the CPC Shanghai Municipal Committee, Qin Gang, State councillor and Minister of Foreign Affairs, Wang Wentao, Minister of Commerce, Jin Zhuanglong, Minister of Industry and Information Technology, Ren Hongbin, president of the China Council for the Promotion of International Trade, and other senior Chinese officials. He also visited the Gigafactory Shanghai late at night. Musk had just left, and the official website of the US State Department announced that Assistant Secretary of State for Foreign Affairs in East Asia and the Pacific, Daniel Kretenbrink, has begun his visit to China. This first and then news has sparked speculation and speculation from all parties that the tense Sino US trade relations, especially the Sino US trade relations, will be eased?

It is normal for people to have such thoughts, after all, as China and the United States are the top two economies in the world, the trade relationship between China and the United States is not only a matter of the two countries, but also has a profound impact on the development of the world's political and economic landscape. In addition, last year marked the 50th anniversary of Nixon's visit to China, and it is a common aspiration of the Chinese and American people to hope for smooth sailing between China and the United States in the next 50 years.  

Musk's visit to China to discuss cooperation is essentially to bring the trade relationship between China and the United States closer together. More than 50 years ago, Ping-pong diplomacy promoted the big ball with small balls, which led to Nixon's visit to China. Now, the visit of a heavyweight entrepreneur like Musk will also set an example for more American enterprises to strengthen cooperation in China. Almost at the same time as Musk came to China, famous American entrepreneurs such as Starbucks CEO Nathan, JPMorgan Chase Chairman and CEO Jamie Dimon also participated in activities in China and sent a signal to all circles that they are optimistic about the Chinese market. Earlier, Apple CEO Cook and General Motors Chairman Mary Bora also visited China one after another. In his speech at the 2023 Global Trade and Investment Promotion Summit held by the China Council for the Promotion of International Trade (CCPIT), Craig Allen, President of the US-China Business Council, said: "American enterprises have clearly received the positive signal from China from the central to the local: China will continue to open its business environment to attract foreign investment."

If there were still some hesitation and hesitation among some American business people before, then the implementation of China's series of opening-up measures has dispelled the doubts of foreign companies, including American companies, about their development in China through practical actions. The vast majority of American companies have already cast a vote in favor of the Chinese market.

After 45 years of reform and opening up, "World Factory" and "World Market" have become one and two sides of China. China has strong production and manufacturing capabilities, the most sound industrial system, and has maintained its position as the world's largest country in goods trade for six consecutive years. It is a major trading partner of over 140 countries and regions; China is also the world's second largest consumer market for goods and the largest online retail market. This has made American entrepreneurs realize that "decoupling and chain breaking" is not feasible. "Decoupling" means disconnecting from the Chinese market, and "chain breaking" means disrupting the global industrial and supply chains. Even though some people have replaced "decoupling" with "de risking", their attempts against China are still unpopular, which means that Loss of China has lost the great opportunities brought by its economic growth.

In fact, many enterprises have already suffered: due to political and other factors, many foreign-funded enterprises have launched the "China+1" strategy, hoping to shift their supply chain to other places. However, due to the low quality of local workers, incomplete supply chain, low supply chain efficiency, and small market size, which are difficult to improve temporarily, it will affect its growth. Therefore, choosing China is still the preferred option.

Correspondingly, the China Council for the Promotion of International Trade recently released the "2023 First Quarter China Foreign Investment Business Environment Research Report", which shows that over 80% of the surveyed foreign enterprises expect their investment profit margin in China to remain unchanged or increase this year, and over 90% of the surveyed enterprises expect their investment profit margin in China to remain unchanged or increase in the next five years. Expanding production lines in China or realizing Digital transformation is the main way for foreign enterprises to increase capital. More than 70% of the surveyed companies stated that their industrial chain layout in China will maintain the current status or further localize the industrial chain in China. The report also pointed out that 61.21% of the surveyed foreign-funded enterprises in China are mainly concentrated in the processing and manufacturing links of the industrial chain.

The fact also proves that Tesla's development cannot be separated from the huge Chinese market size and mature industrial and supply chains. In terms of the market, data shows that in 2022, Gigafactory Shanghai will deliver 710000 vehicles, a year-on-year increase of 48%. In 2022, Tesla will deliver 1.31 million vehicles in the world, and the contribution of Ultimate Factories in Shanghai will be as high as 54.2%. From the perspective of industrial chain supply chain, data shows that in the first quarter of this year, among the top 10 battery manufacturers in the world, Chinese enterprises such as CATL and BYD had a market share of 61%. In addition, the Tesla Energy Storage Ultimate Factories project announced its settlement in Lingang, Shanghai, which will further improve its supply chain. Because of this, more than 90% of the cars manufactured by Gigafactory Shanghai have been localized.

We saw that senior Chinese officials had a harmonious atmosphere and a very friendly attitude during their talks with Musk. During the meeting between Qin Gang and Musk, both sides were witty. Qin Gang compared the relationship between China and the United States to driving. He not only needs to "steer the right wheel" and move in the right direction, but also needs to "step on the brake" in a timely manner to avoid "dangerous driving", and also needs to be good at "stepping on the accelerator" to promote mutually beneficial cooperation; Musk compared China and the United States to conjoined babies, stating that China and the United States are intertwined and inseparable in interests, and opposing "decoupling and chain breaking". This will definitely leave a deep impression on Musk and facilitate his further transmission of this information to the US business community and even the US government. Musk has returned to the United States, but we believe that with the increase of direct flights between China and the United States, more American entrepreneurs will embark on the path of visiting China.