In the last quarter of 2020, the Chinese leadership held a series of important meetings, summed up its work and drew up a blueprint for China's future development, pointing out its development direction and determining its development path.

A new development strategy in a new era with new impetus and new pattern has been rolled out, which sounded the battle clarion for new development goals.

Chinese leaders put the new development strategy of "dual circulation" as the most important thing and the most effective way to handle all challenges and pressures.

Why does China highlight "dual circulation"?

"Dual circulation" mainly refers to relying on the domestic economic cycle while actively promoting circular communication with the international market. Strengthening internal and external interconnection and intercommunication remains the basic policy.

Some international experts worry that China's "internal circulation" is a sign of closed-door development and that China will stop its cooperation and exchanges with foreign countries.

In fact, these concerns are all one-sided, which is due to the lack of in-depth understanding of the Chinese government's decision-making.

China's adoption of the "dual circulation" development pattern is a decision that conforms to the national conditions based on the world's development trend and the multiple influences posed on the future economic structure by the pandemic and is conducive to the in-depth exchanges between China and the international community.

First of all, protectionism and unilateralism are still rampant in the world at present. A few countries like the United States taking "national security" as an excuse have imposed numerous restrictions and barriers to Chinese enterprises and economic development, preventing cooperation and exchanges between Chinese enterprises and other foreign companies.

Under the pressure of Washington, some of US allies have more or less adopted the policy of "closing the door" to Chinese enterprises, squeezing the room of survival and development for the Chinese enterprises in the international market.

At present, the global business environment is further deteriorated by the spread of the pandemic and the manipulation of some politicians from a few Western countries, which greatly limits the activity space of China's overseas markets and is not conducive to in-depth communication with the international community. Under such circumstances, giving priority to developing the domestic market has become the inevitable choice.

It can be said that China's current "dual circulation" pattern is mainly due to the changes in the international market. China takes the initiative of adopting forward-looking preventive measures and making arrangements in the domestic market ahead of time to dissolve various pressures caused by the sluggish international market.

Besides the factors of international market, the unbalanced development of domestic market is also an important reason.

The development levels of eastern and western parts of China are seriously unbalanced, and the gap between the rich and the poor in the north and the south is wide. To solve the imbalance and the income gap, it requires "internal circulation". The demand for development in western China is strong, which will greatly improve the re-integration of China's industrial chain and supply chain. How to integrate the development of western China into the overall development of China is a very urgent strategic task.

Internal circulation not affects opening-up

Focusing on the domestic market in the process of promoting dual circulation is correct both from the international and domestic market demand sides.

While strengthening the competitiveness of industrial chain and supply chain, China must strengthen the cultivation, guidance and improvement of the consumption chain. From the perspective of market economy development needs, the role of the consumption chain cannot be underestimated or ignored, because without consumption it means there is no demand. The supply chain and the industrial chain will "make bricks without straw", therefore they cannot be sustained for stable development. Only by coordinating the development of "industrial, supply and consumption chains" and adhering to the principle of "three chains working together", China's economic vitality will be greatly enhanced.

In order to ensure the high-quality development of China's economy, it must have a maintenance cycle, similar to maintaining automobiles regularly. The economy also requires the maintenance in "three rates": the growth rate, the interest rate and the exchange rate. Only by properly maintaining these basic elements can China's economy achieve stable, far-reaching, secure, reliable and high-quality operation faced up with difficulties and challenges.

China's economy has experienced complete internal circulation in last century. In the 1950s, the United States and other western countries imposed the most rigid blockade on the newly-founded People's Republic of China. In that case, Chinese mainland had to use its own market to consume its own products and only conduct extremely limited trade of industrial products with the Soviet Union and Eastern European countries.

Nevertheless, China's self-reliance has helped the country withstand economic hardship and natural disasters, and even made remarkable achievements in fields of industry, defense, public health, science and technology. The breakthrough of Sino-US relations in the 1970s and the reform and open-up were inseparable from China's success in utilizing the "internal circulation" at that time.

China will not stop its close economic cooperation with the international market. On November 15, 2020, China and other 14 countries signed the Regional Comprehensive Economic Cooperation Agreement (RCEP), which shows China's role in promoting regional economic cooperation and free trade. China's dual circulation policy is based on its national conditions and external environment, completely not affecting its stance of opening market to global business.

China will go all out to continuously build the community with shared future for mankind, pursuing win-win results and inclusive growth for global economy.

Liu Zhiqin is Senior Research Fellow of Chongyang Institute of Financial Studies, Renmin University of China.

The article was translated by Chen Ying. Its original version was published in Chinese.

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