China’s brave new world of dual circulation
The country’s new dual-circulation plans aim to slash imports and boost local investment and consumption. There’s no guarantee it will work, but Beijing is locked on this path.
China’s leaders love a big project.
From the bygone majesty of the Grand Canal to today’s Belt and Road Initiative (BRI), its rulers rarely miss a chance to stamp their mark on history.
The echoes of those projects permeate Beijing’s plans to transform a middle-income nation into an advanced economy.
More information emerges all the time on its ‘dual circulation strategy’. But enough is known to be able to both say what is and predict the winners and losers.
With that in mind, let’s ask and answer a few questions.
First, what is it?
President Xi Jinping first mentioned the dual-circulation strategy (DCS) in May 2020.
Stripped down, it is a plan to massively boost domestic production, investment and spending. China wants to import far less and ensure more of the goods it consumes are made at home.
That, it reckons, is its ticket to wealth and power.
Explain dual circulation please.
A better description might be ‘internal circulation’. As Rhodium Group said in its note 'Understanding internal circulation' on August 5, China wants “less dependence upon external demand and foreign supply chains”.
In August, the Politburo’s review of the first half of 2020 included the phrase nei xun huan (internal circulation), pointing to a desire to be more self-reliant.