China’s Liu He vows Beijing will not give up economic opening with ‘dual circulation’ strategy

27-Nov-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Vice-Premier Liu He, the top economic adviser to President Xi Jinping, has reiterated that China’s new focus on its domestic market and technological independence does not mean it is cutting links with the rest of the world.

Beijing’s “dual circulation” strategy, which will concentrate on domestic demand for future growth and work to promote indigenous technology innovation, has fanned speculation China is trying to reduce its interaction with the outside world. Chinese leaders, including Xi, have said the nation is not in favour of economic “decoupling” and remains committed to opening up its economy.

Liu, who argued against decoupling between China and the United States in January 2020 at the time he signed the phase one trade deal with US President Donald Trump, wrote Beijing was “by no means trying to close itself up or to achieve total self-sufficiency”.

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“It’s impossible to do everything by yourself and to give up the international division of labour,” Liu wrote in an article published in the People’s Daily, a mouthpiece for the Communist Party, on Wednesday.

As a result, China will continue to seek “wider, broader and deeper” economic opening as part of its new economic strategy, Liu said.

The comments come just days after China said it was considering joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which replaced the Trans-Pacific Partnership after the United States pulled out. It also follows the signing of the Regional Comprehensive Economic Partnership (RCEP), a 15-member Asian regional trade pact that includes China, but not the US or India.

Liu reiterated Beijing’s stance that China’s huge domestic market will provide “opportunities” to international businesses. At the same time, the nation will rely on its large domestic market to attract “global commodity and resource” inflows, which China will use to forge new “competitive advantages” internationally, he said.

China’s intended shift from an export-oriented economy is not new, but according to Liu the changes in the international environment over the last decade have made it necessary to reduce reliance on external markets and imported technologies.

Populism in major Western countries has prevailed with rising trade protectionism

Liu He

“After the international financial crisis in 2008, the global market has contracted, with the world economy falling into persistent downturn,” Liu wrote. “Populism in major Western countries has prevailed with rising trade protectionism.

“China must enhance domestic circulation to strengthen autonomy and the sustainability of economic development.”

As China grows richer, its market of 1.4 billion people has become too lucrative for international businesses to pass by.

Beijing’s promise of fairer treatment and wider access for foreign firms has prompted those already in China to stay, and new firms to arrive.

An annual survey by the American Chamber of Commerce in Shanghai found in September that 92.1 per cent of its members said they have no plans to leave China, even though Trump has called on US businesses to do so.

At the same time, China is using access to its market as a lever to push other countries to toe Beijing’s policy lines. For instance, China has restricted imports of a series of Australian goods from wine to coal after Canberra angered Beijing on a number of fronts, from human rights to a call for an international probe of coronavirus’ origin.

However, China’s intention to reduce its exposure to external uncertainties, while increasing the world’s reliance on its domestic market and its place in global value chains, is also raising uneasiness.

The Wall Street Journal reported that the White House is considering the creation of “an informal alliance” of Western countries to jointly retaliate when China uses its trading power to “coerce” other countries, though it is unclear whether this Trump initiative will be pursued by the incoming Biden administration.

https://sg.news.yahoo.com/china-liu-vows-beijing-not-094951862.html

 

Category: China

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