The core of China”s “dual circulation” development pattern, in which domestic and foreign markets can complement each other, is circulation, while the development pattern takes into account the country’s opening-up, a senior economist said.
“Under the ‘dual circulation’ strategy, China aims to facilitate freer flow of factors of production, increase resource allocation efficiency, and better promote mutual improvement of domestic and international circulation,” said Wang Yiming, former vice-minister of the Development Research Center of the State Council.
“China will open its doors even wider to the world. Our country’s new development pattern of ‘dual circulation’ is consistent with the higher-level opening-up. The pattern features domestic and international dual circulation, which complement each other and are inseparable. It is impossible to promote domestic circulation alone without pushing forward international circulation,” said Wang.
He further explained that China has been deeply integrated into the systems of globalization and international division of labor. The development of the Chinese economy is inseparable from the collaboration of global industrial and supply chains.
In addition, the country’s level of industrial technological progress is inevitably linked to international cooperation and competition. If China becomes estranged from the mainstream international society, it would only enlarge the gap between China’s level of technological development and the advanced international standards.
“The core essence of the ‘dual circulation’ development pattern, which considers the domestic market as the mainstay, is to improve the efficiency and quality of national economic circulation and to promote interaction between domestic and international circulation by deepening reforms,” he said.
The major challenges China faces with “dual circulation” will come from the obstruction of economic circulation in several areas including products, technology and supply chains.
The world’s second-largest economy will rely on reforms, innovation and opening-up to handle these challenges. It needs to step up the reform of the circulation system, further carry out the reform of the science and technology system, deepen the reform of the financial system, accelerate the reform of the household registration system, intensify the reform of the income distribution system, and create an environment that enables fair competition among businesses, Wang said.
The key to deepening reforms is to improve the system of fair competition, perfect the system of property rights protection based on the principle of fairness, deepen reforms of market-oriented allocation of factors of production, and build a high-standard market system so that domestic requirements will reach international standards. Only in this way China will realize the goal of “dual circulation”, he said.
At a symposium on economic and social work in Beijing on Aug 24, President Xi Jinping said the world is undergoing profound changes unseen in a century, which are being accelerated by the COVID-19 pandemic. Xi, who is also general secretary of the Communist Party of China Central Committee, called for enhancing the awareness of opportunities and risks and striving to achieve development with a higher degree of quality, efficiency, fairness, sustainability and security.
Starting from the first quarter of 2018, the United States has been indulging in trade friction with China, which was followed by a decoupling in the technology sector and ramp-up of the US pressure on China’s financial sector. Besides, due to adjustments of global supply chains, businesses will look to regional and nearshore production to meet the demands, which will become the more obvious features of supply chains, Wang said.
“Under these circumstances, we should stick to bottom-line thinking, be prepared to deal with changes in the external environment for a long time, and seek our development in a more unstable and uncertain world. By floating the new development pattern of ‘dual circulation’, China is making a proactive and strategic adjustment that aims to adapt to changes in the external environment,” he said.