China’s new economic strategy to rely on domestic market is not a closed-door policy, Beijing advisers say

President Xi Jinping announced a move to reduce reliance on exports and state-led investment, and instead focus on China’s huge domestic market

It is widely perceived as Beijing’s inward-looking response to a hostile outside world, but actually involves attracting investment and signing trade deals

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China should increase free trade talks with Japan and South Korea, move forward with the Regional Comprehensive Economic Partnership and investment treaty talks with Europe and Britain, while also starting negotiations to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Photo: AP

Published: 6:00am, 12 Aug 2020Updated: 6:37am, 12 Aug 2020

China’s new economic strategy of “dual circulation” is focused on competition and opening up, and not intended to severe ties with other parts of the global economy, according to economists and government advisers.

The new economic strategy announced by President Xi Jinping two months ago intends for China to lean towards its domestic market for growth and technological advancements and is widely perceived as Beijing’s inward-looking response to a hostile outside world.

But while the process of economic liberalisation should be increased in preparation for a long-term technology and economic rivalry with the United States, the plan also includes lowering barriers for investors and a motivation to secure regional trade pacts, the economists and advisers said.

“The priority on domestic circulation has indicated the importance of supply-side structural reform to increase domestic competition and higher-level opening,” said Peng Wensheng, chief economist of China International Capital Corporation on Monday.

“Internally, we should have further deregulation, tear down market barriers and promote the reform of state-owned enterprises with the guideline of competitive neutrality.”

The core goal is to reduce market distortion and allocate labour, land and financial resources to higher productive areas

Wang Yiming

Wang Yiming, former deputy head of the Development Research Centre of the State Council, said China needs to improve efficiency at home to survive technological containment by US-led Western countries.