Trading

How China is preparing its economy for a future where the U.S. isn’t the center of global demand – CNBC

An employee works on the production line of lithium battery at a factory of Tianneng Battery Group Co., Ltd on July 20, 2020 in Changxing County, Zhejiang Province of China.

Tan Yunfeng | Visual China Group | Getty Images

China will likely become the world’s largest economy in a few years and it is preparing itself for major shifts in international trade.  

In a world rocked by the coronavirus pandemic and tensions with the U.S., the Chinese government has come out with yet another batch of policy terms to bolster its own economy, this time under the vague umbrella of “dual circulation.” The phrase refers broadly to two circles of economic activity — internal and external — with greater emphasis than before on business at home.

The jury is out on whether “dual circulation” reflects a major change in Beijing’s economic policy, or how new the concept is at all. 

But notably, the high-level political talk comes just months before authorities plan to release China’s economic blueprint for the next half decade — the 14th five-year plan. 

Increased public discussion in the last few weeks has also helped crystallize some of the implications for global trade.

For example, economists at ICBC International, the Hong Kong-based subsidiary of the giant state-owned Chinese bank, have put out a series of notes in the last few weeks on “dual circulation.” One of the reports discussed the implications of the Chinese policy for the next round of
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