How China’s dual circulation strategy heralds a new era for global trade and business

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• The implications of China’s strategy need to be clearly understood by foreign governments and companies
  
• Expect trade frictions to worsen and a more demanding business environment as Beijing seeks greater economic independence while maximising the world’s dependence on China
  

China continues to move forward with its dual circulation strategy, first laid out at the Communist Party Politburo meeting in May last year. The strategy describes “a new development pattern where domestic and foreign markets can boost each other, with the domestic market as the mainstay”.

Internal circulation, understood to mean the domestic cycle of production, distribution and consumption, will be the main engine powering China’s economic growth and development. This internal loop is intended to be independent and complete.

International trade and investment (external circulation) will not disappear, of course. It will, however, play a subordinate, supporting role. The entire strategy is predicated on China’s ability to upgrade its technological prowess and ability to innovate.

As foreign governments and companies try to understand the full implications of the dual circulation strategy and ponder appropriate responses, a historical perspective, a policy perspective and a business perspective will provide useful context.


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