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Dual-Circulation: Connotations and Construction

Feb 28-2022   



In his paper recently published in China Economic Journal (CEJ), Prof. Justin Lin Yifu answers three major questions concerning China’s dual-circulation development paradigm: Why should the domestic circulation be made the mainstay? Why is the international circulation still important? And how to speed up building the new development pattern?

 

Prof. Lin is Honorary Dean of the NSD as well as dean of two other schools at PKU. CEJ is an academic journal in English launched by the NSD and China Center for Economic Research (CCER) and published and distributed by Routledge Journals, part of Taylor & Francis.

 

In 2020, Chinese President Xi Jinping laid out the dual-circulation development pattern. Given China’s position as the world’s second largest economy and the No.1 trading nation, the implementation of the new development paradigm has since exerted considerable impact on the whole world.

 

The rising prominence of the domestic circulation reflects the law of economic development, which indicates that the proportion of domestic circulation in a country’s economy increases with the growth of economic size and the enlargement of service industry, both caused by the rise of income, writes Prof. Lin. Many scholars have pointed finger at what they term ‘China’s export-oriented development model’, which is a blatant disregard of the fact that the country’s export had plummeted from 35.4% of its GDP in 2006 to 17.4% in 2019. Misguided views as such turns a blind eye to the overall look of the Chinese economy and have given rise to false accusations against China.

 

The policy of “making full use of the domestic and international markets and resources” remains equally important. According to Prof. Lin’s new structural economic theory, for China to realize high-quality growth, it must continue to fully leverage its comparative advantages based on its factor endowment structure and its products should be sold not only domestically but also internationally so as to achieve economy of scale and accelerate capital accumulation. Though the Chinese economy amounted to 16.4% of the global total in 2019, the rest of the world still offers an enormous market for Chinese products. At the same time, China should import products for which it doesn’t have comparative advantages, thereby reducing costs.

 

To implement the new development paradigm, the most important undertakings are to tap the growth potential through structural reform, deepen reform to improve the efficiency of domestic circulation and push forward the opening up to make better use of international resources, proposes Prof. Lin.

Dual-Circulation: Connotations and Construction

Feb 28-2022   



In his paper recently published in China Economic Journal (CEJ), Prof. Justin Lin Yifu answers three major questions concerning China’s dual-circulation development paradigm: Why should the domestic circulation be made the mainstay? Why is the international circulation still important? And how to speed up building the new development pattern?

 

Prof. Lin is Honorary Dean of the NSD as well as dean of two other schools at PKU. CEJ is an academic journal in English launched by the NSD and China Center for Economic Research (CCER) and published and distributed by Routledge Journals, part of Taylor & Francis.

 

In 2020, Chinese President Xi Jinping laid out the dual-circulation development pattern. Given China’s position as the world’s second largest economy and the No.1 trading nation, the implementation of the new development paradigm has since exerted considerable impact on the whole world.

 

The rising prominence of the domestic circulation reflects the law of economic development, which indicates that the proportion of domestic circulation in a country’s economy increases with the growth of economic size and the enlargement of service industry, both caused by the rise of income, writes Prof. Lin. Many scholars have pointed finger at what they term ‘China’s export-oriented development model’, which is a blatant disregard of the fact that the country’s export had plummeted from 35.4% of its GDP in 2006 to 17.4% in 2019. Misguided views as such turns a blind eye to the overall look of the Chinese economy and have given rise to false accusations against China.

 

The policy of “making full use of the domestic and international markets and resources” remains equally important. According to Prof. Lin’s new structural economic theory, for China to realize high-quality growth, it must continue to fully leverage its comparative advantages based on its factor endowment structure and its products should be sold not only domestically but also internationally so as to achieve economy of scale and accelerate capital accumulation. Though the Chinese economy amounted to 16.4% of the global total in 2019, the rest of the world still offers an enormous market for Chinese products. At the same time, China should import products for which it doesn’t have comparative advantages, thereby reducing costs.

 

To implement the new development paradigm, the most important undertakings are to tap the growth potential through structural reform, deepen reform to improve the efficiency of domestic circulation and push forward the opening up to make better use of international resources, proposes Prof. Lin.