OpinionGiven global headwinds, China’s ‘dual circulation’ strategy needs all of society’s support

Dual circulation aims to rebalance China’s economy by reducing dependence on exports and big fixed-asset investments, against an increase in consumption

It will take an enormous effort from the whole society to support this, especially against strong headwinds in international markets

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Published: 8:30am, 25 Nov 2022Updated: 2:22pm, 29 Nov 2022

China’s 20th party congress made several critical decisions. One of the most important was to accelerate the modernisation of Chinese society with high-quality development. What challenges and risks await China on its path to reaching this goal?

In his report to the congress, President Xi Jinping made clear that high-quality development was the top priority in building a modern socialist country – including implementing “dual circulation”, a strategy that was added to the party constitution.

China’s leadership has long recognised the need to move beyond the production and export-led growth model, even though it brought significant achievements and contributed to rapid economic growth over the past four decades.

A model based on local production with cheap labour and aggressive exports cannot continue to drive economic growth as wages rise and manufactured products lose their competitiveness in international markets.

In parallel with this process, China’s purchasing power grew, along with the domestic consumption market. That is why dual circulation was proposed.

The idea was first voiced on May 14, 2020, during a meeting of the Politburo, at which Xi outlined the need to “give full play to China’s huge domestic market and consumption potential” to establish a new format of development where “domestic and international dual circulation would complement each other”.