China’s move to double down on a pivot away from export-led growth in favour of developing its domestic market reflects a strategic shift by Beijing to prepare for the “worst case scenario” after the coronavirus pandemic, according to analysts.
President Xi Jinping told dozens of top economic advisers in Beijing at the weekend that China was pursuing a new development plan in which “domestic circulation plays the dominant role”.
Xi’s speech on Saturday offered the clearest clues so far regarding the Chinese leader’s thinking on economic strategies in response to Washington’s decoupling threats.
Xi’s remarks suggest that Beijing is moving towards giving up the “great international circulation” strategy adopted in the 1990s that helped fuel its growth to become the world’s second-largest economy.
“It’s a kind of preparation for the worst-case scenario, including the decoupling with the United States and even the whole Western world,” said Hu Xingdou, a Beijing-based independent economist.
Hu said China has no choice but to face the adversity, but warned that it must not undo its market reforms and not go back to the closed nature of a command economy where the central government makes all economic decisions.
