By Isaac Cohen*
The term “dual circulation” has been used by President Xi Jinping of China to describe the new development model to be discussed at the next October meeting of the Communist Party Central Committee. The discussion will form part of the process of approval and execution of the new five-year plan which starts next year.
Since the Chinese economy started slowing down from the spectacular two-digit rates of growth of the last three decades of the past century, it was recognized that the development of China had to become more self-sustained, given increasing limitations in external investment and demand.
Until recently, this process of turning around the economy was happening gradually. However, according to President Xi, (quoted in The Wall Street Journal 09/08/20) there is now a sense of urgency, because “the world has entered a period of turbulence and transformation,” in which China is facing “an external environment with even more headwinds and countercurrents… where the global market is shrinking.” Therefore, the need to implement the strategy of “dual circulation,” based on the two robust pillars of domestic demand and technological innovation, to decrease external vulnerabilities in agriculture, energy and technology.
At the same time, among Chinese academic circles, given the deterioration of relations between China and the United States, there are more references to the possibility of “decoupling” both economies. An indicator of the turn toward domestic sources of dynamism can be found in the contribution of exports to China’s gross domestic product, which decreased from almost one third a decade ago, to 18 percent today.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, TELEMUNDO and UNVISION and other media.