Illustration: Chen Xia/GT

Editor's Note: 

Currently, China's economy is steadily advancing along the path of high-quality development, even as domestic and international circumstances become increasingly complex. Some Western media, due to misunderstanding or bias, have repeatedly questioned or even distorted China's economic development. Accordingly, the Global Times launches the "Q&A on China's Economy" column to publish opinion pieces to present facts and clarify perceptions.


Does expanding domestic demand mean developing behind closed doors? For quite some time, a narrative has prevailed in Western public opinion, claiming that China's emphasis on "building a robust domestic market" and "expanding domestic demand" implies a squeeze on foreign investment, or even an abandonment of the "dual circulation" strategy, ultimately heading toward seclusion. These voices pit "expanding domestic demand" against "expanding opening-up," which constitutes a fundamental misunderstanding of China's development logic.

The reason Western public opinion reflexively equates "expanding domestic demand" with "scaling back opening-up" stems, to a certain extent, from the West's historical experience. Under its past economic governance model, when facing economic headwinds and the need to boost domestic demand, the West has often resorted to protectionist practices: erecting barriers, shutting out foreign goods and capital, decoupling its domestic market from the global system, and even pursuing a beggar-thy-neighbor approach for self-preservation. 

This old approach of protecting domestic demand through seclusion has become the West's ingrained routine for tackling crises in modern times. It has also led some to develop a rigid mind-set, mistakenly believing that any country's emphasis on its domestic market necessarily implies a retreat from the outside world and a reduction in openness. However, this is by no means the path China has chosen in fostering its new development paradigm.

In China's strategic planning, what exactly is the relationship between "expanding domestic demand" and "expanding opening-up"? Is it a mutually exclusive relationship where one gains at the expense of the other, or a symbiotic relationship where the two complement each other? Let's first look at the example of new-energy vehicles (NEVs). 

In recent years, China's domestic demand for NEVs has surged, and exports have also driven the rapid growth of the global industry as a whole. A traditional fuel-powered car usually requires 600 to 700 chips, while a new energy vehicle needs 1,600 chips or even more. While China leads the world in NEV production, its demand for imported high-end chips and raw materials for power batteries has also surged significantly. Therefore, we must not focus solely on the increase in China's NEV exports; we must also recognize the role that China's NEVs play in the global industrial structure. By expanding domestic demand, China is not moving toward isolation; rather, it is driving the upgrading of global industrial chains and promoting the optimization of the global industrial structure, thereby strengthening its ties with the rest of the world.

Furthermore, the process of expanding domestic demand in China is, in itself, a process that promotes the mutual reinforcement of the domestic and international "dual circulation." To build a robust domestic consumer market, we must remove bottlenecks in the domestic market, ensure smoother circulation of goods nationwide and establish unified market rules. This will not only make the domestic circulation more efficient but also provide more convenient infrastructure and institutional safeguards for international circulation. Expanding domestic demand does not mean closing the door; rather, it means strengthening our own foundations to open the door wider and with greater confidence. It does not mean abandoning the "dual circulation" strategy, but rather building a more solid foundation for it. At the same time, regardless of the kind of circulation, achieving cost and price stability requires greater scale. Expanding domestic demand (by increasing the number of domestic customers) and opening up to the international market (by increasing the number of international customers) are essentially the same thing: Both aim to expand the customer base for the supply side, thereby reducing costs and improving efficiency.

This is not difficult to understand. Only when domestic market demand is strong, the industrial chain operates smoothly, and both consumption and investment are picking up, can the entire economy have a continuous source of vitality. The smoother the domestic circulation, the stronger the economy's foundation, and the greater its appeal to the world. It is just like a hugely popular commercial district. The more prosperous its business grows, the more it attracts top brands, massive customer flows and high-quality resources to gather on its own, forming a powerful gravitational field. Once such a gravitational field is established, it will firmly underpin the international circulation. Advanced technologies, critical components and high-quality goods we need can be imported more smoothly, while our competitive products, services and innovative achievements can also go global with greater ease. The domestic circulation serves as the foundation, and the international circulation as its extension; the more solid the foundation, the broader the stage for opening up to the outside world.

Why, then, has China laid particular emphasis in recent years on "expanding domestic demand" and "building a robust domestic market"? This is not due to China's policy of opening-up having changed, but because of profound shifts in two key areas. First, the external environment has undergone profound changes. Against the backdrop of accelerating global transformations unseen in a century and the rise of unilateralism and protectionism, it is neither realistic nor sustainable for China, as the world's second-largest economy, to rely on external demand as a long-term driver of growth. Second, China's domestic market has undergone profound changes. With a population of over 1.4 billion and a per capita GDP that has surpassed $10,000, China has become the world's largest and most promising consumer market. Expanding domestic demand is not only a necessary measure to address external challenges but also a proactive choice to leverage the advantages of our vast market.

Expanding domestic demand and building a robust domestic market also enable China and the world to achieve mutual benefit and shared development through two-way flows. Against the backdrop of relatively weak external demand, China's consumption recovery and market expansion have driven imports of various goods - from agricultural products and energy to high-end consumer goods and intermediate goods - bringing tangible orders to enterprises in many countries. Sharing in the growth dividends of the Chinese market has become a consensus among an increasing number of economies. Furthermore, the growth of China's technology companies enables more countries and regions to share in the benefits of China's intelligent era. All of this demonstrates that China's development has always been oriented toward the world, and the process of strengthening itself is providing the globe with more choices and opportunities. China remains a stabilizer and powerhouse for the global economy.