Dual circulation at heart of economic strategy

Two paths

While the plan is yet to be finalized, experts expect that the dual-circulation strategy will be its centerpiece and propel China to navigate future economic headwinds and achieve sustainable, high-quality growth.

Under the strategy, the domestic market is the mainstay of the economy, while domestic and international markets support each other.

After China put forward the dual-circulation development idea in May, officials at different levels of government stressed the importance of building the new paradigm.

Li Lin, chief economist at Beijing-based fintech company CreditEase, said the new strategy is expected to be the country's most important policy direction after the supply-side structural reform drive and guide China's development for the next five years.

The strategy focuses on fully utilizing domestic resources as opening up of the economy continues. The previous development model featured heavy reliance on external demand and production factors, especially natural resources and high-end technology, Li said.

At a symposium with entrepreneurs in July, President Xi Jinping explained the reasoning behind the new strategy. In the face of an external environment characterized by rising protectionism, a global economic downturn and a shrinking international market, China must give full play to the advantages of its huge domestic market to boost its economy and the global recovery, Xi said.

Efforts should be made to elevate the modernization of industrial and supply chains, promote scientific and technological innovation, and speed up breakthroughs in core technologies, Xi said.

Vice-Premier Liu He wrote in an article published in People's Daily in November that apart from being a strategic decision to respond to changes in the international arena, dual circulation addresses domestic economic problems, such as bottlenecks in the supply chain and mismatches between supply and demand.

Liu Wei, president of Renmin University of China, said the dual-circulation development strategy will not only deal with the current risks and challenges, but also ensure sustainable and high-quality economic growth.

Through supply-side reform measures, domestic demand will expand and drive a more effective supply of goods, Liu said.

The dual-circulation strategy is backed by a comprehensive supply system and a large, fast-growing domestic market, experts said.

China's value-added industrial output reached 31.3 trillion yuan ($4.8 trillion) last year, making the country the largest manufacturing power in the world for 11 consecutive years, the Ministry of Industry and Information Technology said on Monday.