BEIJING (Reuters) – China has actually unveiled a “dual blood circulation” strategy to cut its reliance on abroad markets and technology in its long-term development, a shift induced by a deepening rift with the United States.
WHAT IS THE ‘DUAL FLOW’ MODEL?
Chinese President Xi Jinping initially raised the idea in May and later on elaborated that China will rely mainly on “internal blood circulation” – the domestic cycle of production, distribution, and consumption – for its advancement, supported by development and upgrades in the economy.
Xi likewise stated “internal flow” will be supported by “external blood circulation”.
No even more details have been announced on the technique.
3 decades ago, former leader Deng Xiaoping adopted a “excellent worldwide flow” strategy, but the 2008-09 global crisis exposed the vulnerability of the export-led model and prodded policymakers to rebalance development towards domestic demand.
The “double flow” technique could end up being an essential priority in the government’s 14 th five-year plan (2021-2025), due to be unveiled during the annual parliament session in early 2021.
Tech Security DOMESTIC CYCLE
To jump-start “internal circulation,” China requires to boost family incomes and consumption.
Key would be its continuous urbanisation programme to turn countless migrant employees into city dwellers to expand China’s middle class. About 60%of China’s population live in urban locations.
China is currently a “hyper-sized” consumer market with 1.4 billion individuals. Its rapidly growing middle class is at least over 400 million strong.
Up until now this year, the healing in consumption has lagged behind production amidst task losses and economic unpredictabilities brought about by the coronavirus pandemic.
Tech Security SUPPLY CHAINS
China has boasted the most total production supply chains on the planet, helped by foreign companies.
However tension with the United States has exposed China’s vulnerability as it relies heavily on U.S. high-tech products, such as semiconductors, requiring Beijing to stimulate domestic innovation in efforts to protect domestic supply chains.
Under the “double blood circulation” strategy, Xi intends to improve tech development and push Chinese companies up the worldwide value chain, crucial to globalising China’s home-grown business, boosting family incomes, and in turn, stimulating domestic need.
Chinese leaders still promote greater market opening to draw in more foreign financial investment in high-end production to reinforce its supply chain security and prevent foreign nations’ from enticing companies away from China.
Reporting by Kevin Yao; Editing by Jacqueline Wong
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