"Dual circulation," the new development pattern that China adopted in 2020, takes the domestic market as the mainstay while allowing domestic and foreign markets to reinforce each other.
Since China adopted the new development pattern of "dual circulation" in 2020, there have been speculations that China is "turning inward."
Such speculations are simply a misinterpretation of the new development pattern, which takes the domestic market as the mainstay while allowing domestic and foreign markets to reinforce each other.
In no way should "dual circulation" be interpreted as a closed domestic loop.
To help the readers get a fuller picture of China's new development pattern, the article provides information regarding its birth, possible contributions to the country's further opening-up, and potential opportunities it is expected to bring to the world.
GROWING DOMESTIC DEMAND
The new development pattern was rolled out based on changes in China's development conditions and demand for long-term high-quality growth.
It also represents China's swift response to a changing global landscape that has witnessed rising protectionism and anti-globalization.
"Through the strategy, China hopes to solidify its domestic market capabilities while also increasingly opening up to the rest of the world," said Cavince Adhere, a Kenya-based international relations scholar.
"Recent trends have indicated just how perilous it is for countries to exclusively rely on international value chains in the backdrop of protectionist economic models or political aggressions manifested through sanctions. On this account, it is only rational that countries develop reasonable levels of domestic self-sufficiency and competitiveness," Adhere said.
A stronger domestic China will increase economic throughput in terms of goods demanded in other parts of the world besides China, which remains the largest consumer market, he added.
With a population of over 1.4 billion and a middle-income group of more than 400 million, stable demand from the world's largest consumer base serves as a crucial pillar for the global economy.
"China can actively participate in the development and reinforcement of global supply chains while also developing its own domestic supply chains. This can allow China to benefit from specialization and efficient resource allocation at home while minimizing the risks associated with overreliance on external supply sources," Adhere said.
FURTHER OPENING-UP
China has benefited greatly from its reform and opening-up over a period of 40-plus years. Expanding the domestic market is not in contradiction with China's policy of opening-up, nor does it mean the international market is no longer important to the world's second-largest economy.
The United Nations Conference on Trade and Development said in its World Investment Report 2023 that global foreign direct investment (FDI) fell by 12 percent in 2022, while inflows to China rose by 5 percent to a record 189 billion U.S. dollars, mainly in manufacturing and high-tech industries.
In the first half of 2023, some 24,000 new foreign firms were established in China, marking a 35.7-percent increase year on year, according to China's Ministry of Commerce.
"I think we can say that opening up is a great benefit to China's neighbors and many countries across the world because they get the opportunity to sell to the Chinese market," said Stephen Perry, chairman of Britain's 48 Group Club.
"The world's business needs China. And the world's business will continue to find that China is a good place to be," Perry said.
"China is a model global trader, especially to developing countries," Perry said. "Being a major trader helps keep China as part of the world and stays safer."
Even during the COVID-19 pandemic, China held a string of international events to further open up itself to the world, including the China International Import Expo, the China International Consumer Products Expo and China International Fair for Trade in Services.
More notably, China signed in 2020 the landmark Regional Comprehensive Economic Partnership (RCEP) agreement, the world's largest free trade pact.
As a result, trade between China and other RCEP members in 2022 increased 7.5 percent year on year to 12.95 trillion yuan (about 1.8 trillion U.S. dollars), and RCEP investment in China, in actual use, climbed 23.1 percent to 23.53 billion U.S. dollars, data shows.
GLOBAL OPPORTUNITIES
China's new development pattern will bring numerous new opportunities to the world in many areas, one of which is the implementation of the Belt and Road Initiative (BRI), Adhere noted.
Echoing the view, Perry said, "China's new development model will bring more higher quality goods into the world markets, especially Asia and BRI, and provide a market for developing countries to export to China."
Over the past decade since the initiative was launched, China has signed more than 200 cooperation documents with more than 150 countries and more than 30 international organizations, resulting in more than 3,000 cooperation projects and generating nearly 1 trillion U.S. dollars in investment, official statistics show.
Apart from developing countries that benefited from opportunities through Belt and Road cooperation, multinational companies from developed countries also discovered fresh investment and cooperation potential in China.
"Although domestic production and consumption are emphasised in the new model, China still prioritizes international trade and investment as an avenue for technology exchange, resource procurement, and market access," Adhere said.
In recent years, many foreign companies have chosen China as their ideal location for their research and development (R&D) centers to cater to the vast Chinese market demands and serve a larger global market.
Global carmaking giant Tesla Inc. announced in April that it will build a new mega factory in Shanghai, which will be dedicated to manufacturing the company's energy-storage product Megapack.
To tap into China's fast-growing electric vehicle (EV) market, Volkswagen Group, a veteran German carmaker, reached an agreement in July to buy a 4.99-percent stake of Chinese EV startup Xpeng for 700 million U.S. dollars and co-develop two EV models for the Chinese market.
In May, Volkswagen also inked an investment agreement to build an R&D, innovation, and procurement center in Hefei, the capital of China's Anhui Province.
In March, global water technology provider Xylem put its R&D center in China into operation, while French multinational Schneider Electric launched its automation R&D center in east China's Wuxi City. In May, a new Volvo car design studio was opened in Shanghai. The carmaker only has three design studios across the globe.
L'Oreal Chairman Jean-Paul Agon said China has proven to be a stabilizer for the global economy, an accelerator for consumption and the world's laboratory for innovation.
"We believe that 'investing in China is investing in the future,'" Agon told Xinhua in a recent interview.
"With a further open market, improving business environment and promising domestic demand boost initiatives, China is embracing the world with new opportunities. Meanwhile, China is also bringing opportunities to the world. We look forward to more companies enjoying these opportunities," he said.