Some Thoughts on Dual Circulation
Seventy years ago, China was one of the world’s poorest countries, until 1983 the Per Capita GDP remained under $1,000. From the fall of the Qing Dynasty through the Republican era, the country had developed poorly. From 1913 to 1949, due to internal and external factors was a period of instability: warlords declaring independence from the Republic; famine; civil war; global recession; Japanese invasion and WW2, all contributed to many people in the world’s most populous country living in poverty.
Now, China’s GDP is second only to the USA and almost 5 times that of Japan. The per capita GDP, because of its large population, remains relatively low and because of China’s population, geography and ecology, encompassing deserts and mountain ranges the median income is still very low at only $4,246.
Many people, particularly those reading misleading western media, could be forgiven for thinking this was a problem caused by communism or poor leadership. History proves this to be untrue. The industrial revolution in Europe created waves of poverty and crime lasting hundreds of years. Poor people went to workhouses, slaving in notoriously poor conditions and “criminals” were imprisoned or shipped off to penal colonies around the world, fixing two problems, urban overcrowding and lack of workers for the colonies.
China took a different approach after starting to address these problems less than 70 years ago and is well on the way success; first through Poverty Alleviation and Rural Revitalisation. Now, Dual Circulation and all done without any of the associated increases in crime, slavery, imprisonment, deportations or colonisations, expansions and invasions which accompanied the accumulation of wealth in the West.
While many Western media articles assume Dual-Circulation is aimed at reducing reliance on the west, that’s only partially true. The USA, unilaterally, is making life difficult in a range of industries and technologies with bans and sanctions aimed at slowing China’s growth. Without a doubt, Dual Circulation will help alleviate those issues but other reasons are less obvious: increasing demand domestically improves lives inside China and increases local production; it also helps export and domestic markets to boost each other. Shifting China from being an export and investment driven economy to one of innovation and consumption.
If proof were needed that China isn’t closing to overseas investment it’s on the increase. China has risen from 91 to 31 in the list of “ease of doing business” countries. It has strengthened IP protection laws several times, opened up Free Trade zones (FTZ), first in Shanghai in 2013 and now 21 throughout the country. The Negative list for foreign investment continues to be reduced and is now limited to just 27, while laws on investments in FTZs have been relaxed.
While investment money needs stability, Europe isn’t currently providing that but China is proving more stable and reliable a partner with German Chemical Giant BASF investing $10 billion in Guangdong British-Swedish pharmaceutical giant AstraZeneca proving China’s investment opportunities are positive by investing billions in the Shanghai and Wuxi. Even the prestigious Financial Review supports suggested in a recent report that it’s hard to ignore China’s investment environment.
In other words, Dual circulation is exactly what it says it is. A two-pronged strategy to increase domestic spending, helping to raise incomes and lifestyles inside China as well as an increasingly improving and welcoming environment for foreign investment and international trade.
