The outline of the 14th Five-Year Plan (2021-25) and the long-range objectives through the year 2035 approved in this year's National People's Congress session further highlights the new development strategy of dual circulation, in which the domestic and overseas markets reinforce one another, and the domestic market serves as its backbone.
The nod implies that the new paradigm will act as a guiding principle for China's economic and social development in the coming years. Meanwhile, this concept for heightened development will in turn take on an influential role in shaping global economic expansion in a profound and positive way.
In the earliest days of its proposal, some international players feared China might tighten its opening-up policy as a result of China-U.S. trade frictions and the rise of unilateralism.
Given the Chinese Government has never tapered efforts to intensify China's opening up to the outside world, all apprehensions are unfounded. Last year saw the government upgrade several of its policies on opening up, in terms of breaking open the nation's financial market to attract more foreign investment.
A deeper analysis will find that by proposing a new development paradigm, China intends to deepen its connection with the rest of the world.
Domestic circulation aims to shatter obstacles in the line of production, distribution and consumption, ensuring China's domestic economy will run more efficiently, whereas the idea of a dual circulation refers to making China's domestic market part of the wider international market.
Since China has long embarked on the path of mingling with the global economy, why has it chosen this specific time to announce the concept of its new development paradigm? To a large extent, it is the result of a strategic decision to make good use of China's advantages in terms of international cooperation, based on the country's current development reality.
In the past, China was passively adapting itself to international rules and regulations so that it could be accepted into the global market. The new development paradigm, however, is a pro-active and assertive move to meet the changes of the broader international environment, participate in world economic events and shoulder bigger responsibilities.
Forty years after opening up to the outside world, China has developed a full-fledged industrial chain and turned itself into the biggest manufacturing and trading power in the world. The nation is doing relatively well in regards to production and distribution, but its domestic consumption lags behind, consequently constraining domestic circulation.
In 2019, the household consumption rate in China came in at 38.8 percent, much lower than the 68 percent in the United States and the 52 percent in Germany. In this context, it is understandable why China is promoting the expansion of household consumption.
In an era of economic globalization and value chain specialization, countries worldwide today participate in international economic circulation in different degrees. Under China's new development paradigm, the country's vast market is open to the rest of the world and expected to interact with the global market in a positive way.
However, to build up such a dual circulation paradigm is not an easy feat. Since early 2020, hurdles like the COVID-19 pandemic and China-U.S. tension escalation have dealt a heavy blow to China's import demand and the international supply chain. The U.S. sanctions imposed on China's hi-tech companies in particular proved a dominant factor in the disruption of China's industrial chain, in turn hindering the formation of the dual circulation paradigm.
In the process of implementing the new paradigm, China not only needs to eliminate the various misconceptions and doubts, but also must safeguard economic globalization and stand up against unilateralism.
Copyedited by Elsbeth van Paridon
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