Copy Reference In the last quarter of 2020，the Chinese leadership held a series of important meetings to sum up its work and draw up a blueprint for China's future development，pointing out its development direction and determining its development path.
A new development strategy in a new era with new impetus and new pattern has been rolled out，sounding a clarion call to achieve new development goals.
Chinese leaders place the new development strategy of “dual circulation”high on its agenda as an effective way to handle all challenges and pressures.
“Dual circulation”mainly refers to relying on the domestic economic cycle while actively promoting circular communication with the international market．Strengthening internal and external interconnection and intercommunication remains the basic policy.
Key to the “internal circulation”are innovative manufacturing and increased private consumption．The former is to be realized through a massive spending over the next five years on innovation to climb the manufacturing value chain and become self-sufficient in advanced semiconductors and other technologies．The latter is to be attained by boosting household income through urbanization，turning migrant workers into city dwellers and enlarging the around 500 million middle-class population.
The “internal circulation”is to be supported by “external circulation，”opening up the economy wider to attract more foreign investment in high-end manufacturing，strengthening the supply chain and deterring countries from luring businesses away from China.
The “dual circulation”not only makes sense but is deliverable．Private consumption，for example，is less than 40 percent of GDP as compared to the around 70 percent in Western economies，and it thus has significant room for expansion.
Moreover，Chinese households have huge savings，estimated at around 25 percent of disposable income，and low consumer debts．With incentive policies such as lower tax rates or increased investment，the 1.4 billion consumers could open their wallets wider，culminating in enhancing and sustaining economic growth.
Why Does China Highlight ‘Dual Circulation’？
Since China rolled out the new development pattern featuring “dual circulation，”there have been voices hyping concerns that the Chinese economy is “turning inward，”and even interpreting the enhancement of internal circulation as “closing doors” to the global market．These claims are groundless and lack any basic foundation in economics.
In fact，these concerns are all one-sided，which is due to the lack of understanding of the Chinese government's decision-making.
China's adoption of the “dual circulation”development pattern is a decision that conforms to the national conditions based on the world's development trend and the multiple influences posed on the future economic structure by the pandemic and is conducive to the in-depth exchanges between China and the international community.
First of all，protectionism and unilateralism are still rampant in the world at present．A few countries like the United States taking “national security”as an excuse have imposed numerous restrictions and barriers to Chinese enterprises and economic development，preventing cooperation and exchanges between Chinese enterprises and other foreign companies.
Under the pressure of Washington，some of US allies have more or less adopted the policy of “closing the door”to Chinese enterprises，squeezing the room of survival and development for the Chinese enterprises in the international market.
At present，the global business environment is further deteriorated by the spread of the pandemic and the manipulation of some politicians from a few Western countries，which greatly limits the activity space of China's overseas markets and is not conducive to in-depth communication with the international community．Under such circumstances，giving priority to developing the domestic market has become the inevitable choice.
It can be said that China's current “dual circulation”pattern is mainly due to the changes in the international market．China takes the initiative of adopting forward-looking preventive measures and making arrangements in the domestic market ahead of time to dissolve various pressures caused by the sluggish international market.
Besides the factors of international market，the unbalanced development of domestic market is also an important reason.
The development levels of eastern and western parts of China are seriously unbalanced，and the gap between the rich and the poor in the north and the south is wide．To solve the imbalance and the income gap，“internal circulation”is necessary．The demand for development in western China is strong，which will greatly improve the re-integration of China's industrial chain and supply chain．How to integrate the development of western China into the overall development of the nation is a very urgent strategic task.
‘Internal Circulation’ Does Not Affect Opening-up
Focusing on the domestic market in the process of promoting “dual circulation”is correct both from the international and domestic market demand sides.
While strengthening the competitiveness of industrial chain and supply chain，China must also strengthen the cultivation，guidance and improvement of the consumption chain．From the perspective of market economy development needs，the role of the consumption chain cannot be underestimated or ignored，because without consumption it means there is no demand．Only by coordinating the development of “industrial，supply and consumption chains”and adhering to the principle of “three chains working together”can China's economic vitality be greatly enhanced.
In order to ensure the high-quality development of China's economy，a maintenance cycle is required．The economy also requires the maintenance in “three rates”: the growth rate，the interest rate and the exchange rate．Only by properly maintaining these basic elements can China's economy achieve stable，far-reaching，secure，reliable and high-quality operation in the face of difficulties and challenges.
China will never stop its close economic cooperation with the international market．In fact，China's effort to open its market to the world does not stop，even during the COVID-19 pandemic．With the virus put under control，China has successfully held the China International Fair for Trade in Services，the China Import and Export Fair，and China International Import Expo.
The fairs not only offer platforms for Chinese consumers to reach featured products from overseas markets，but also create opportunities for other economies to join the market，especially for products from less-developed economies，which had insufficient ability to enter the market before.
On November 15，2020，China and other 14 countries signed the Regional Comprehensive Economic Cooperation（RCEP）agreement，which shows China's role in promoting regional economic cooperation and free trade．China's “dual circulation”policy is based on its national conditions and external environment，completely not affecting its stance of opening market to global business.
According to the General Administration of Customs，the nation's trade in the first three quarters of 2020 totaled 23.12 trillion yuan（US$3.49 trillion），up 0.7 percent year-on-year.
China has been a major engine of the global economy．With a rapid recovery from the coronavirus and further promotion of opening-up，the Chinese market's demand for overseas products will continue to increase and keep offering momentum for the global economic recovery.
A worker operates a vehicle to pick up goods in a warehouse at a smart logistics park in Linyi，east China's Shandong Province，on November 21，2020．（GUO XULEI）
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According to the General Administration of Customs，China's trade in the first three quarters of 2020 totaled 23.12 trillion yuan（US$3.49 trillion），up 0.7 percent year-on-year．
About the author
Liu Zhiqinis a senior research fellow at Chongyang Institute of Financial Studies，Renmin University of China.