From the Lowy Institute's The Interpreter blog:
Endorsing “self-reliance”, Beijing raises the geopolitical stakes
China’s yearly National People’s Congress (NPC), which convened last week in Beijing, generated more attention than usual. Most of the headlines focused on the confab’s decisions to impose additional electoral restrictions in Hong Kong, a predictable but nonetheless dismal further deterioration in that city’s political vitality.
But amid the news about Hong Kong, economic growth targets for 2021, and self-congratulation for weathering the Covid-19 pandemic, the NPC also approved an ambitious economic agenda for the next 15 years. In particular, the assembled delegates endorsed the new “dual circulation” strategy – comprising “domestic circulation” and “international circulation” – a framework first coined by Xi Jinping last year. More than mere economic tweaking, this strategy, if successful, will have profound implications for global economics and geopolitics.
One the one hand, the strategy will encourage greater reliance on China’s enormous internal market (“domestic circulation”) for growth and technological innovation, rather than on capital-intensive growth, low-value exports and imported technology which spurred the country’s economic success in the past.
The other half of the strategy, “international circulation”, will double down on China’s long-standing effort known as “Made in China 2025” (MIC 2025). The aim will be to upgrade its manufacturing base through the integration of information technology to improve productivity, increase the indigenous content of higher-end technology products, reduce reliance on foreign inputs and become more self-sufficient technologically.
As Premier Li Keqiang declared in his work report to the NPC:
We will give priority to domestic circulation, and work to build a strong domestic market and turn China into a trader of quality. We will leverage the flows of the domestic economy to make China a major magnet for global production factors and resources, thereby promoting positive interplay between domestic circulation and international circulation.
The dual circulation strategy, and MIC 2025 in particular, ultimately aim to position China as the leading source of critical technologies and industrial outputs of the future across the value chain – in design, manufacturing processes, technology and material inputs, and finished products – in high-priority sectors including next-generation information technology, robotics, aerospace, high-speed rail, green energy, biopharma and new materials. Analysis by Chinese think tanks and foreign counterparts estimates that the MIC 2025 plan hopes to capture 40–80% of the global value chains in these sectors between 2020 and 2030....
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