China to phase in 'dual circulation' growth strategy in 2021-25

China is set to phase in a new "dual circulation" development strategy in the 14th Five-Year Plan (2021-25) period, according to the communique of the fifth plenary session of the 19th Central Committee of the Communist Party of China, released on Thursday.

To achieve a balance between development and economic security, the country will speed up building a modern economic system and accelerate the establishment of a new development pattern featuring "dual circulation", which takes the domestic market as the mainstay and allows the domestic and foreign markets to boost one another.

The communique stated that "internal circulation" must be made smoother to ensure that the "dual circulation" strategy to perform smoothly, amid other goals such as fostering the strength of the domestic market and invigorating rural development.

Analysts said China will seek to drastically boost the domestic consumer market to ensure long-term sustainable economic growth under the "dual circulation" strategy, making sure the country's economic growth could be less impacted by uncertainties and volatilities outside its borders, such as tariffs and technology wars with the US.

Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations, said the strategy could give China more room to maneuver under the current uncertain international environment, and facilitate the transition to a high-quality, consumption-driven economy, but the flows of factors including capital, talent, information, technology and land must be made smoother.

However, Chen said building a "dual circulation" strategy cannot be completed overnight, and it involves tackling structural issues such as systemically improving disposable incomes of all its citizens and bridging China's rural-urban divide.

"China's vast rural areas, with roughly 700 million people, remain a development weak link, which call for earnest efforts to bridge the gap between rural and urban areas, including improving the so-called last-mile logistics, which have checked the economic growth of grass-roots communities," Chen told the Global Times on Thursday.

An inclusive development strategy is needed to balance the growth that is heralded by sectors such as information technology and the old-fashioned economy, as they provide a large portion of jobs, according to Chen.