No results matched your search

Breaking News
Nasdaq Snaps Three-Week Losing Streak as Apple Restores Tech Health

EconomySep 08, 2020 07:05PM ET

© Reuters.

By Kevin Yao
BEIJING (Reuters) – China has unveiled a “dual circulation” strategy to cut its dependence on overseas markets and technology in its long-term development, a shift brought on by a deepening rift with the United States.
WHAT IS THE ‘DUAL CIRCULATION’ MODEL?
Chinese President Xi Jinping first raised the idea in May and later elaborated that China will rely mainly on “internal circulation” – the domestic cycle of production, distribution, and consumption – for its development, supported by innovation and upgrades in the economy.
Xi also said “internal circulation” will be supported by “external circulation”.
No further details have been announced on the strategy.
Three decades ago, former leader Deng Xiaoping adopted a “great international circulation” strategy, but the 2008-09 global crisis exposed the vulnerability of the export-led model and prodded policymakers to rebalance growth towards domestic demand.
The “dual circulation” strategy could become a key priority in the government’s 14th five-year plan (2021-2025), due to be unveiled during the annual parliament session in early 2021.
DOMESTIC CYCLE
To jump-start “internal circulation,” China needs to boost household incomes and consumption.
Key would be its ongoing urbanisation programme to turn millions of migrant workers into city dwellers to expand China’s middle class. About 60% of China’s population live in urban areas.
China is already a “hyper-sized” consumer market with 1.4 billion people. Its rapidly growing middle class is at least over 400 million strong.
So far this year, the recovery in consumption has lagged behind production amid job losses and economic uncertainties brought about by the coronavirus pandemic.
SUPPLY CHAINS
China has boasted the most complete manufacturing supply chains in the world, helped by foreign companies.
But tension with the United States has exposed China’s vulnerability as it relies heavily on U.S. high-tech products, such as semiconductors, forcing Beijing to spur domestic innovation in efforts to secure domestic supply chains.
Under the “dual circulation” strategy, Xi aims to boost tech innovation and push Chinese firms up the global value chain, key to globalising China’s home-grown companies, boosting household incomes, and in turn, stimulating domestic demand.
Chinese leaders still advocate greater market opening to attract more foreign investment in high-end manufacturing to strengthen its supply chain security and deter foreign countries’ from luring firms away from China.

Related Articles

Some 3,500 U.S. companies sue over Trump-imposed Chinese tariffs
By Reuters – Sep 25, 2020
1

By David Shepardson WASHINGTON (Reuters) – About 3,500 U.S. companies, including Tesla Inc (O:TSLA), Ford Motor Co (N:F), Target Corp (N:TGT), Walgreen Co (O:WBA) and Home…

Turkish rate hike needs follow through for real game change
By Reuters – Sep 25, 2020
1

By Karin Strohecker LONDON (Reuters) – Turkish policymakers are no strangers to unexpected action when in a tight corner, but analysts said Thursday’s surprise interest rate hike…

G7 ministers back extension of debt freeze for poorest nations, urge reforms
By Reuters – Sep 25, 2020 By Andrea Shalal, Tetsushi Kajimoto and Leigh Thomas WASHINGTON/TOKYO/PARIS (Reuters) – G7 finance ministers on Friday backed an extension of a G20 temporary freeze in debt…

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Original Source