As China enters 2014 with the orderly unfolding of reform measures outlined at the Third Plenum of CPC. The external environment wherein China will carry out these reforms brims with challenges and difficulties that include America’s Reindustrialization unleashed after global financial crisis.

The 2008 crisis hit the United States especially hard on its manufacturing industry that had claimed supremacy for the past century. It is the backbone of American economy with its share of added-value over 20% and jobs at 21.65% of national total before 1980. Both dropped sharply to 11% and 8.9% in 2009. Reflecting on the root causes of crisis，American elites believe that the imbalance between real economy and finance is definitely one of them. Moreover，they are convinced that its manufacturing industry has to be competitive simply to maintain American military supremacy globally. They want no stone unturned for the US to meet this challenge from emerging economies，China in particular.

A succession of actions quickly followed. From 2009 to 2012，the US unveiled initiatives ranging from“Revitalizing America’s Manufacturing”，“Buy American”，“Doubling Export in 5 Years”to“Promoting Domestic Employment”. The reindustrialization strategy has thus taken shape and real progress been made in strides to fill the“hollowing”of American manufacturing industry.

Restructuring of manufacturing industry has uplifted production and its value-added share up 0.9% to 11.9% in 2010. The return of manufacturing to the States followed and in the last 2 years，2/3 of major American manufacturers have moved their factories back either State-side or to countries in American neighborhood. Of the 108 American companies operating globally，one survey shows that 33% plan to move their manufacturing back to the States.

This has contributed to economic recovery and recoupment of employment in the States. 2012 saw the US real economic growth at 2% while manufacturing grew 6.2%. The same year witnessed unemployment drop from 10% to 7% with 489，000 new jobs created by manufacturing industry.

America’s reindustrialization has coincided with the emergence of Third Industrial Revolution and been aided by large-scale shale-gas production and the rising labor cost in emerging economies as they engage in structural readjustments. It is not fabricated to“fit China”，but the reality is not different for China. How will it impact China？

Many believe this is about“made in China”or“made in America”. China’s reform from late 1970s onward has produced an economic miracle and together with other emerging markets has changed global economic as well as political landscape. As a result，the US global market share has declined. 2010 saw China for the first time overtake the US as the biggest manufacturing economy with 19.8% of the world total vs. 19.4% for the US. Moreover，China has also surpassed the US as the country with the greatest numbers of patent applications. Plus that year marked China’s ascendency to global number two in terms of GDP. The anxiety and sense of crisis so permeates the American government and society that many Americans worry about the US losing“the great power rivalry”with China. Hence the constant pressure on China by the US on RMB appreciation，opening financial sector and intellectual property protection etc.

Another thrust of reindustrialization strategy is America’s global rebalance towards Asia and for“like-mined countries”to form mega-FTAs like TPP and TTIP for the purpose of creating new trade rules of much higher standards. China and other emerging economies are the targets.

The US joined TPP negotiation in November 2009 and a framework document emerged in 2011. It is understood that complete sets of rules have been formulated against the perceived Chinese competition. TPP members are expected to complete negotiation in 2014. Both TPP and TTIP are tools for the US and other western nations to reshape the global governance system and rules that have been supposedly under attack from emerging economies. These new rules will involve international trade，investment and finance，high-tech，new energy and agriculture. It is not a big stretch to imagine that should these attempts succeed，China will be confronted with an international trade，investment and economic order that is dominated by the US，Europe and Japan. China will be put in a strategically defensive and awkward position with no easy options.

At the same time，the US government has taken protectionist measures including setting up an office for trade law enforcement and beefing up its supervision and screening of Chinese exports and investments into the States with a view to curbing Chinese investments and exports to protect domestic manufacturing. As a result，the US put China on“article 301”watch list in 2010 and subsequently in 2012 on“article 306”list. It is expected that Chinese investments in the US will meet more strident approval processes and the situations with Chinese companies like Huawei，ZHE and Sanyi will be repeated. Furthermore，no matter how much China will do in IPR protection，IPR will always be an instrument for the US in its protectionist push against China.

It is true that fast ascendency of emerging economies does have geo-political and geo-economic consequences relating to global governance system created by the western nations. America’s Reindustrialization is tinged by geo-political considerations against China. That is a given. What then should China do to cope with such complicated developments？

First，China’s advance should not be distracted by externalities wherever they come from. Growth and reform are what need to continue regardless of external interference. Generally speaking，three conditions should be met for any country to have long-term sustainable economic development，i.e.scale of labor and their quality；technological breakthrough；adequate capital input. China needs to have greater input in all three no matter where America’s Reindustrialization goes.

Secondly，the 3rd Industrial Revelation，as a historical trend，is already in full swing characterized by Internet，new materials，new sources of energy and smart production like 3D printing. This is the backdrop against which China should view the America’s Manufacturing Revitalization. It is inadvisable for China to abandon low-end jobs in the global manufacturing chain now given the reality that China’s huge population still contains a large part of low skill labors. Excess manufacturing capacity could be assimilated by moving them out to other developing countries where there is an acute need.

Thirdly，real industrial revolution starts with revolution of energy and information dissemination which has already gripped us tightly. China，with the advantage of a late-comer，could jump right into this revolution by focusing more on R&D，especially in the fields of new energy and IT sector. It is imperative for China to set up and improve upon an innovation-inducing system of science-and-technology，education and financial services，all intertwined for the purpose of raising productivity.

Fourthly，economic competition is in the final analysis the competition of talents，of people. China needs to pay particular attention to the education and cultivation of all kinds of talents. To be more specific，conditions and environment must be created for the right talents to grow up and take hold. Moreover China should not only be able to retain its own talents，but also in a position to attract talents from advanced nations by creating a“soft environment”that is ideal for economic growth and industrial management.

Finally，on such attempts to remodel international trade system that excludes China as TPP and TTIP，China has no option but to meet the challenge head-on. It at least should do the following：

1，Continue to push for an early conclusion of Doha Round based on the initial agreement reached in Bali so as to safeguard the global governance regime.

2，Make greater efforts to move the negotiation on RCEP to a fruitful end while try its best to upgrade FTA between China and ASEAN.

3，Translate into reality the proposals by Chinese leadership to“build the economic belt of the Silk Road”and“the Maritime Silk Road”to China’s west and east respectively.

4，With China’s own geo-strategic perspective，make careful but quick study of such meg-trade-deals as TPP and TTIP and adopt an open approach to any regional arrangement that will facilitate global trade. Whatever the conclusion，it’s always better to be“in”early on because only by joining the negotiation can one expects to get relatively favorable outcome. We are confident that China’s economic stability and growth is not just good for itself but also a blessing to the whole world.