Dual Circulation Strategy: Revitalizing China's Economy Post-Covid-19

Dual Circulation Strategy: Revitalizing China's Economy Post-Covid-19

This month marks the 75th anniversary of the founding of the People's Republic of China. Looking back at history, China has trodden an arduous and sometimes treacherous journey over the past century to get itself out of misery and near-disintegration.

There is no lack of statistics about the scale of social and economic transformation that has taken place since Deng Xiaoping launched the reform and opening up in 1978. Reforms have not come without pain, or twists and turns, especially controversies over liberalisation and the conversion from a command economy to the market.

Historical Transformation and Economic Growth

From 1990 to 2019, before the Covid-19 pandemic, China's real gross domestic product (GDP) grew by nearly 10 percent annually on average, contributing more than a quarter of global growth. Such a jump could not have been possible without a vibrant and innovative private sector which, according to some mainland experts, provides 80 percent of urban employment and 90 percent of enterprises.

Challenges Ahead for Economic Stability

First, managing a socialist market economy entails a tricky balancing act. In delivering continuous economic growth that directly affects wealth and employment, the state must also square with its socialist goals. President Xi Jinping, who took office in 2012, encountered issues such as an overheating property market and widening inequalities.

Addressing Debt and Demographic Concerns

• China’s national debt is around 88 percent of GDP, significantly lower compared to other major economies.
• While declining fertility and an ageing population are common in mature economies, China focuses on productivity enhancement through education and innovative technology.

Global Context and Institutional Barriers

Facing US-China rivalry, China’s policymakers must foster an open investment environment. The third plenum's commitment to expanding institutional openness marks a crucial point for China's global discourse.