China intends to boost its domestic economy to weather trade war challenges.
Rewritten Article:
Beijing's relentless pursuit of a self-reliant domestic market continues, as the city works towards minimizing the impact of external tariff disputes - even with the temporary truce in its trade war with the US.
Addressing a State Council meeting on Thursday, Premier Li Qiang underscored the importance of sustaining "domestic circulation" - a term that signifies China's mission to boost its economic independence by fostering a robust, integrated domestic market. Xinhua, the state-run news agency, reported this statement.
Li emphasized that the nation should leverage its "domestic stability and sustainable growth potential" to combat rising global uncertainties and maintain a stable economic trajectory. The meeting was chaired by Vice-Premier Ding Xuexiang.
Zhang Zhiwei, President and Chief Economist at Pinpoint Asset Management, expressed his view that China can no longer solely rely on exports as its primary economic driver given the current trend of deglobalization.
The Chinese government is adopting several strategies to promote domestic circulation and withstand external tariff shocks. These strategies aim to balance both domestic and international economic activities, addressing global uncertainties.
One such strategy is the Dual Circulation Strategy, introduced in 2020, which focuses on making the domestic market the primary growth engine while reinforcing it with international trade. This approach aims to optimize domestic production, distribution, and consumption, subsequently reducing reliance on external markets [3][5].
Additionally, efforts are being made to stimulate domestic demand by promoting high-quality export products within the local market and integrating them into trade-in programs. This approach supports domestic businesses and encourages economic stability [5].
China is also investing heavily in high-tech industries like AI to drive innovation and domestic growth, which can help create a self-sustaining economy capable of withstanding external shocks [4].
In an attempt to reduce vulnerability to external tariff shocks, China is implementing the "Made in China 2025" (MIC25) strategy, which encourages foreign companies to localize production within the country. This strategy helps maintain economic stability by ensuring critical components are produced domestically [1].
China is also diversifying its trade partnerships, establishing stronger ties with blocs like BRICS and Southeast Asia. This diversification can help mitigate the effects of tariff shocks by offering alternative markets and trade routes [4].
Lastly, China plans to stimulate economic growth and stability through increased fiscal spending that targets affected enterprises [4]. These strategies, collectively, work towards enhancing China's economic resilience and promoting sustainable growth through domestic initiatives.
- Despite the temporary truce in the trade war with the US, China is persistently focusing on strengthening its domestic economy by employing strategies like the Dual Circulation Strategy, which prioritizes domestic production, distribution, and consumption, thus aiming to lessen reliance on external markets.
- To foster economic stability and independence, China is also investing in high-tech industries like AI and encouraging foreign companies to localize production within the country under the "Made in China 2025" (MIC25) strategy, while simultaneously diversifying trade partnerships with blocs like BRICS and Southeast Asia to mitigate the effects of tariff shocks on its business and finance sectors.
