The Influence Of US Manufacturing Re-shoring On China’s Industrial Upgrading

With the implementation of the Obama administration’s strategy to revitalize manufacturing and the rise of overseas production costs, the phenomenon of U.S. manufacturing re-shoring showed a gradually rising trend. The gradually accelerated manufacturing re-shoring is rewriting the global manufacturing industry pattern, the re-shoring phenomenon bring about a sharp drop in U.S. manufacturing FDI in China and reducing the chance of China’s high-tech industry to undertake international industrial transfer. While the re-industrialization which is vigorously promoted by United States coincides with the ongoing industrial restructuring of China, the situation is bound to have a profound impact on industrial upgrading in China. This paper aims to combine theoretical and empirical analysis under the background of U.S. manufacturing re-shoring to have a comprehensive analysis of China’s industrial upgrading from the perspective of direct foreign investment.Paper will regard the U.S. manufacturing re-shoring as divestments of direct investment and reverse of international industry transfer. Inspect the mechanism of manufacturing re-shoring on industrial upgrading in developing countries from the perspective of foreign direct investment change, so as to specifically inquire the impact path and status quo of manufacturing re-shoring on industrial upgrading of China on the basis of analysis ofthe of China’s utilization of foreign investment. We find that foreign direct investment can effectively contribute to industrial upgrading of China through four paths, admittedly, in recent years, the investment from US is going down, especially for hi-tech industry. Through the measurement of two-stage regression model to demonstrate the impact of the U.S. manufacturing re-shoring on our industry upgrading. And further simulate the possibility, especially for the withdraw of FDI in the long-term impact of foreign direct investment after the divestment by the system dynamics model.This study showed that the U.S. manufacturing re-shoring will intensify competition between the two countries in high-end manufacturing sector and plays the role of obstruction to China’s industrial upgrading, especially the further enhance in high-tech industry. This paper propose corresponding policy recommendations about China’s industrial upgrading under the background of U.S. manufacturing regression on the basis of summarizing the results of theoretical analysis and empirical analysis.