International Conference on China’s Dual Circulation Strategy
Event: Sustainable Growth Model
FES and the Shanghai Administration Institute (SAI) held a two-day on- and offline conference on the subject of China’s Dual Circulation Strategy and what it entails for the country’s social and economic development as well as its relations with the rest of the world.
In 2020 the “Dual Circulation” Strategy was promulgated by the Chinese government. Its objective is to replace the export-oriented economic model with one driven by domestic demand as well as to achieve greater independence from foreign technologies, intermediate products and cyclical fluctuations.
The two-day conference held by FES and the Shanghai Administration Institute (SAI) on the subject of China’s Dual Circulation Strategy focused on what this strategy entails for the country’s economic social and economic development as well as its relations with the rest of the world.
At the heart of this approach is the recognition that China has potentially the largest domestic market in the world and that it should use its undeveloped potential.
China aims to achieve this goal through measurements such as the break-up of monopolies, resolution of over-capacities and investments in innovation – to improve the overall quality of the market and strengthen its supply side.
During the debate, it was pointed out that besides supply side reforms measures to increase demand are also necessary. A more reliable social security system could for example lead to less savings, therefore more demand and growth.
Both China and Germany are national economies with significant trade surpluses which was another topic for discussion. As one German scholar explained, Germany’s surplus is largely due to a lack of domestic demand.
In the context of digitalization and the platform economy, the experts also discussed the impact these developments have on the objectives of the Dual Circulation Strategy. These range from the problem of large platform monopolies to outsourcing the major risks of life to “self-employed” individuals.
Furthermore, the aspects of ecological sustainability and global justice were discussed. One argument suggested that more countries or regions should dispose of their own supply chains, reducing greenhouse gas emissions caused by excessive trade. This, in return, was received as an argument for a state-governed industrial policy where the state organizes supply chains strategically.
As the two afternoons of debate made clear, the Dual Circulation Strategy is not a ready-made master plan, but a work in progress, a set of policies that largely still remain to be defined. In this context, it remains important to underline the significance of reforms that go beyond simple supply side policies and instead tackle questions of social and global justice as well as the environment. The establishment of a reliable social security system, fair wages and good public services are the prime requirements for not only achieving stable demand, but also social justice.