Strategy to reorient China's economy
Domestic-international dual circulation
(
simplified Chinese
:
?????循?
;
traditional Chinese
:
國內國際雙循環
;
pinyin
:
guonei guoji shu?ng xunhuan
) is a
Chinese government
strategy to reorient the
country's economy
by prioritizing domestic
consumption
("internal" or "domestic circulation") while remaining open to
international trade
and investment ("external" or "international circulation").
[1]
[2]
[3]
The first academic study on dual circulation defined it as "the domestic consumption-driven economic rebalancing to achieve sustainable economic development".
[4]
The economic policy of dual circulation was put forward on 14 May 2020 by the
Politburo Standing Committee
of the
Chinese Communist Party
(CCP)
[5]
and later revised by
CCP General Secretary
Xi Jinping
to stress prioritizing "internal circulation".
[6]
Dual circulation involves expanding domestic demand, focusing on the domestic market, improving the country's capacity for innovation, reducing dependence on foreign markets, and at the same time remaining open to the outside world.
[2]
[7]
[8]
History
[
edit
]
The intellectual predecessor of dual circulation was the "great international circulation", a strategy of economic growth through export-oriented production, articulated by Wang Jian during the era of former
paramount leader
Deng Xiaoping
.
[4]
[9]
[10]
In 2020, the
COVID-19 pandemic
brought
a global economic downturn
and a decline in demand. Along with the
China?United States trade war
and American trade restrictions against
Huawei
and other Chinese firms, this has forced the
Chinese government
to adopt a domestic focus.
[11]
In the Chinese view, these trends towards anti-globalization, populism, and protectionism in Western countries means that China should expand its domestic markets and economic self-reliance.
[12]
On 14 May 2020, the CCP Politburo Standing Committee proposed a "new development program of mutual benefit through domestic-international dual circulation".
[13]
On 23 May 2020, at the
Chinese People's Political Consultative Conference
13th national committee, Xi Jinping said the country needed a development program that "takes the domestic market as the mainstay while letting internal and external markets boost each other".
[8]
[14]
On 4 November 2020, during his keynote speech by video at the opening ceremony for the third
China International Import Expo
, Xi said that this policy "is not any kind of closed-off domestic circulation, but rather an increasingly open domestic-international dual circulation, not just for China's own development needs, but also to benefit the people of all countries".
[15]
Assistant head of the CCP
Central Financial and Economic Affairs Commission
office
Han Wenxiu
said that "the proposal for a new development program that takes the domestic market as the mainstay while letting internal and external markets boost each other is the CCP's practical application of the objective laws of economic development. This is a proactive step, not a passive response; a long-term strategy, not an interim measure."
[16]
Xi states that there are two guiding principles for China's approach to international engagement under its dual circulation strategy.
[17]
: 133
The first principle is that China should actively cooperation with all countries and regions that are willing to cooperate with it in order to form a diversified pattern of cooperation.
[17]
: 123
The second is that the more China opens up to the outside world, the more it must also pay attention to its own security, focus on its competitiveness, and manage opening up to mitigate risk.
[17]
: 133
Implementation and impact
[
edit
]
There are two prongs to the dual circulation strategy. First, it seeks to rely more on China's domestic consumers.
[18]
: 160
Second, it seeks to innovate more domestically developed technology and thereby reduce China's reliance on western technology.
[18]
: 160
Dual circulation has recalibrated China's industrial policy to place a renewed emphasis on state-led growth and self-reliance based on China's domestic market of 1.4 billion consumers,
[19]
which include over 400 million middle income consumers.
[12]
In an effort to facilitate the strategy by closing technology gaps, China spent 2.5% of its GDP on research and development during the Thirteenth Five Year Plan of 2016?2020.
[19]
Dual circulation is a key part of China's
14th Five-Year Plan
(2021?2025).
[20]
[3]
Proposals for implementing the policy include government support for domestic technology companies and working to attract more foreign investment. Analyst
Wang Wen
[
zh
]
of the
Chongyang Institute for Financial Studies
speculated that it would include government support for the service and energy sectors.
[1]
Analysis
[
edit
]
Some observers say the dual circulation plan is not that different from previous Chinese government efforts to refocus the economy.
[1]
As early as 2006, a government work report described a "strategy of expanding domestic consumption...and strengthening the role of consumption in fueling economic development".
[21]
Julian Gewirtz suggested that the "dual circulation" slogan was introduced to "force focus, mobilization and prioritization".
[1]
Analysts said that the strategy would involve supporting domestic businesses and reducing China's dependence on imports, including for
energy
,
microchips
, and other technology.
[1]
[9]
Economist
Yu Yongding
said that a key part of the project should be ensuring China's food and energy security.
[10]
Economist
Yao Yang
described the policy as a response to worsening
China?United States relations
, saying that "China needs to prepare for the worst-case scenario".
[1]
Dual circulation also involves growing the
Chinese middle class
in order to increase domestic consumption. Economist
Michael Pettis
said that the plan would require transferring wealth from the government to private citizens, which would not be easy. According to the
South China Morning Post
, in late 2020 it remained "unclear whether China is ready to make such deep-rooted changes".
[2]
The Economist
summarized the strategy as "keeping China open to the world (the 'great international circulation'), while reinforcing its own market (the 'great domestic circulation')". More specifically,
The Economist
said that dual circulation involves making the Chinese economy more open to foreign companies in order to make them dependent on China, which in turn would give the Chinese government more geopolitical leverage.
[9]
In 2021, a team of researchers at
Nanjing University of Information Science and Technology
presented the first academic study on "Dual Circulation".
[4]
It identified key factors responsible for it, and presented its first comprehensive definition.
See also
[
edit
]
References
[
edit
]
- ^
a
b
c
d
e
f
Buckley, Chris (7 September 2020).
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.
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2021
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- ^
a
b
c
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.
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10 March
2021
.
- ^
a
b
Jin, Keyu (2023).
The New China Playbook
. New York: Viking. pp. 250?251.
ISBN
9781984878281
.
This is reflected in the concept of "dual circulation" that constitutes a central component of China's fourteenth Five-Year Plan, of two engines simultaneously propelling its economy. One keeps China open to the world ("international circulation"), and the other develops self-reliance by developing its own market ("domestic circulation"), in ways that reinforce each other.
- ^
a
b
c
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.
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.
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doi
:
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.
ISSN
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.
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- ^
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ISBN
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.
OCLC
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.
{{
cite book
}}
: CS1 maint: others (
link
)
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"
. 中?????.
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. Retrieved
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.
- ^
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.
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2021
.
- ^
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.
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. Retrieved
2020-11-07
.
[
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]
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.
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.
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.
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.
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. Stanford, California:
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.
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.
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.
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