Normal industrial adjustments under ‘dual circulation’ strategy should be viewed objectively

By Wang Yuanfeng Source: Global Times Published: 2020/11/6 22:59:54

Illustration: Luo Xuan/GT

As China seeks industrial self-reliance, economies including Malaysia, Singapore, Thailand and Chile will face losses due to losing market share in China, Reuters reported, citing a recent report by Euler Hermes, a credit insurance company under Allianz.

The report concluded that with their higher technology level, economies like the US, Germany and Japan will face lower risks.

Facing mounting pressures from the US chip supply ban and other crackdowns in key technological areas, it's necessary for China to focus on boosting domestic innovation to become self-reliant in core technologies under the "dual circulation" strategy.

However, the aim of these normal industrial adjustments is to improve self-reliance and prevent a rupture of the industrial chain. In the long run, such adjustments won't undermine any economies' interests, but will bring more opportunities for them.

If China's strategy shift attaches more importance to "internal circulation" and reduces reliance on external markets, it means the current economic structure will be adjusted.

Such adjustments are also in line with China's development situation, because now China's domestic consumption has become stronger.

From this perspective, more attention is being paid to the domestic market, and it may have a certain impact on related foreign industries and the markets that China's industries rely on. But as China develops, it may also create new opportunities for other countries in the future. This should be viewed objectively.

The short-term restructuring pain noted in the Euler Hermes report may be felt in certain sectors for some of China's trading partners, but such difficulties are inevitable in technological progress and economic development, and they shouldn't be solely attributed to China's strategic shift.

For instance, in the process of mobile phones' development, the production chains for old generation handsets were eliminated by new manufacturing lines. The development and upgrading of the industry and the market is inherently dynamic, and companies need to constantly look for new development space in order to stay in the market and the industry for a long time. Therefore, whether for a domestic industry or for the division of labor in related international industries, dynamic adjustments are normal.

China's "dual circulation" strategy is also an adjustment that China has made in response to changes in the international and domestic market conditions. In the future, China's development will still be open and inclusive. The China International Import Expo (CIIE) is an example of the country's efforts to promote imports, which will also promote opportunities and the development of industries related to trading partners.

The author is a professor at Beijing Jiaotong University.


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