Stephen Olson

Opinion | China’s dual circulation strategy is a step towards sustainable trade

The world is not turning its back on trade or globalisation, but it is being driven towards a more nuanced approach with a more realistic balance than the previous ‘more is better’ mindset

The US, EU, Japan, India, Australia and other leading trade nations are also, to one degree or another, making similar adjustments. Expect the process to be messy

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Containers are seen at a port in Qingdao, in eastern China's Shandong province, on September 1. Exports are expected to play a less-prominent role in China’s growth plans as the new “dual circulation strategy” emphasises boosting domestic demand. Photo: AP

Stephen Olson

Published: 3:30am, 13 Sep 2020Updated: 6:54am, 13 Sep 2020

China’s recently announced “dual circulation” strategy – in which its traditional emphasis on growth through exports will be bolstered by a renewed focus on spurring domestic demand – is a recognition of a simple reality: the highly conducive international trade environment that fuelled China’s supercharged growth for decades is breaking down.

The prevailing presumption since at least the 1990s, across both developed and developing nations, has been the more trade, the better. The efficiencies and hoped-for geostrategic benefits of deep economic integration were seen as far outweighing any dislocations that might occur.

Whether by happenstance or design, China’s timing during this period was impeccable. It revved up its export engine at the precise moment the large markets of the West were most hospitable, both philosophically and fiscally, to absorbing Chinese imports and investing heavily in China.

Today, the old assumptions are fading away and a new era is emerging in which more trade and deeper integration – with China in particular – is no longer considered an unalloyed good and the presumed benefits no longer taken as a given.

This new era is being driven by the confluence of three factors. First, there is a growing belief in the West that it gravely underestimated the deleterious effects that accompanied China’s integration into the global trade system.

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Second, there is a greater willingness on the part of not only the United States but also the European Union, Australia and Japan to confront China and attempt to reset the terms of the trade relationship.