China has embarked on a new journey toward fully building a modern socialist country. As China enters a new development stage, we will follow a new development philosophy and foster a new development paradigm. We hope to work with countries in the Asia-Pacific and beyond to achieve higher-standard mutual benefit and win-win cooperation.
A hallmark of major-country economies is that they can function as a circulating loop due to the dominant role of domestic demand, China is not an exception. Entering the new stage of development, facing profound changes in the composition of its domestic demand, the structure of its industry, its technology systems, and its growth drivers, as well as the deep adjustments to international flows, China has made an active choice to foster the “dual circulation” development pattern, with domestic circulation as the mainstay and domestic and international circulations reinforcing each other.
As China strives to expand domestic demand, we will pursue opening-up at a higher level. What we envision is not a closed domestic circulation but an inclusive one that connects domestic and international markets. We will engage more deeply in the international circulation and enable the domestic and international circulations to complement each other and achieve multiplying effects.
Key indicators of China’s recent economic performance have proved that “dual circulation”development pattern is the right answer to the challenges China is now facing, and has led to staged success in return.
Internal economic cycle plays a leading role
Between 2012 and 2020, China’s dependence on foreign trade fell from 47.3% to 31.7%, continuing a trend that first emerged in 2006 when China’s reliance on foreign trade peaked. In four of the past nine years, domestic demand has contributed to economic growth at a rate of over 100%, which has helped boost the dynamism of domestic economic flows significantly.
Last year, services consumption, though worst hit by Covid-19, contributed 50.1% to the country’s consumption, as new business scenarios such as contactless sales and smart shops continued to emerge. In terms of scale, from 2012 to 2020, China’s total retail sales of consumer goods has increased from RMB 20.6 trillion to RMB 39.2 trillion, an average annual growth rate of 8.4%. China has become the world’s second largest consumer market.
Positive interplay between internal and external economic flows
The “dual circulation”development pattern is by no means intended to close China’s doors, but to strike a better balance between openness and independence, as well as between domestic and international considerations, and open the Chinese market further.
As China’s domestic demand continues to rise, the volume and international market share of China’s foreign trade hit record high, and China strengthens its position as the world’s biggest trader in goods. In 2020, the volume of China’s foreign trade, exports and imports totaled RMB 32.2 trillion (about USD 4.6 trillion), up by 1.9%. The figure expanded 24.5% year on year to RMB 21.34 trillion (about USD 3.3 trillion) from January to July in 2021, hitting 10-year high. Exports rose 24.5% from a year ago, while imports jumped 24.4%.
Last year, the inflow of foreign direct investment into China grew by 4.5%, making it the largest FDI destination in the world, compared to a 40% decline worldwide. From January to July 2021, paid-in FDI in China reached RMB 672.19 billion, up by 25.5% year on year. Despite the challenges posed by Covid-19, 56% of American firms, 73% of European firms and 89% of Japanese firms made a profit in China last year.
The positive interplay between internal and external economic flows advances the development of China’s robust domestic market and the trading capacity in a coordinated manner, and makes the Chinese economy more attractive to global factors and resources and more competitive in the world market.
Commitment to greater openness
Greater openness is an integral part of the “dual circulation” development pattern. China is committed to strengthening international cooperation. All-round opening up creates more opportunities for other countries to share China’s development dividends, and China’s strong domestic demand provides a huge market for other countries to explore.
So far, China has inked 19 free-trade agreements involving 26 countries and regions. Worldwide, more than 350 international free-trade agreements have been reached. Amid the disruptions of Covid-19, China’s trade with free-trade-agreement partners rose by 3.2% in 2020.
China has slashed the number of sectors that are off-limits to foreign investors from 93 to 33, while foreign ownership limits on the financial and automobile sectors have been loosened. China will continue to lower the threshold for foreign investment access and fully implement the three negative lists for foreign investment nationwide. At the same time, we will also implement the newly-published catalogue of encouraged foreign investment industries to create more investment opportunities. We will further improve the business environment based on market principles, under the rule of law and up to international standards to unclog the connection between domestic and international markets.
Fostering an open world economy
Openness, inclusiveness and cooperation is not only indispensable to China’s “dual circulation” development pattern, but also plays a key role to tackle all kinds of global problems.
Under the combined impacts of changes and a pandemic both unseen in a century, human society has once again found itself at a historic crossroads. It is about hostile confrontation or mutual respect, seclusiveness and decoupling or openness and cooperation, zero-sum game or win-win results. Viewed from the perspective of “my own country first”, the world is a cramped and crowded place perpetuated in fierce competition. Viewed from the perspective of “a global community with a shared future”, the world is a vast and broad place full of cooperation opportunities. The choice is in our hands and the responsibility falls on our shoulders.
Now more than ever, the international community needs to come together to meet the challenges and promote common development. We need to enable all countries to step up development cooperation, and see to it that the fruits of development are shared by all. We need to bring greater equity, higher efficiency and stronger synergy to global development, and jointly oppose the practice of seeking technology blockade and divide as well as decoupling. We must remove barriers, not erect walls. We must open up, not close off. We must seek integration, not decoupling.We need to embrace openness and inclusiveness to develop an open world economy. We need to safeguard the multilateral trading system with the WTO as its cornerstone, and ensure the stable and smooth operation of global industrial and supply chains.
China will continue to promote the “dual circulation ” development pattern, which is not only China’s choice in the new stage of development, but also follows the global trends favoring peace, development, cooperation and mutual benefit.
By Mr. LONG Zhou, Consul General of the People’s Republic of China in Melbourne