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"Dual circulation" not a closed domestic loop

(Xinhua)    10:11, September 25, 2020

BEIJING, Sept. 24 (Xinhua) -- China's new economic development pattern of "dual circulation," although anchored on meeting internal demand, doesn't mean a return to seclusion, said an economist with an official think tank.

The new development pattern, which takes the domestic market as the mainstay and allows domestic and foreign markets to boost each other, has had the markets abuzz with interpretations since it was floated by the country's top leadership in May.

This model can be viewed as a solution for China to build up resilience with better domestic development and wider opening-up against external uncertainties, Wang Changlin, president of the Academy of Macroeconomic Research of the National Development and Reform Commission, told Xinhua in an interview.

Expanding domestic demand should be the strategic basis of the "dual circulation" development pattern, said Wang, explaining that the country's super-large market, with 1.4 billion people, is pivotal to the connection between internal and external markets.

Official data showed China's consumer spending contributed 57.8 percent to GDP growth last year, compared to the 35.3-percent ratio in 2008.

"However, effective demand is still not enough while the income gap is relatively wide," said Wang, suggesting deeper reform of income distribution and better basic public services in the fields of education, medical treatment, and elderly care.

Measures should be taken to support enterprises, as thriving market entities can buoy productivity, he said.

With the potential of domestic demand continuing to be unleashed in the future, efforts should be made to enhance independent innovation capabilities, said Wang.

Defining production as the starting point of economic circulation, Wang stressed reinforcing the industrial chain, which largely depends on breakthroughs in core technologies.

"Core technologies, which are critical to China's industrial upgrading, can't be begged for or purchased," he said.

Pointing out the necessity of nurturing new growth drivers, Wang believed that technological innovation and industrial development in frontier areas such as the digital economy, smart manufacturing, and new materials, should be spurred.

Wang also noted that China's independent innovation system should be an open one, making full use of the international market, resources, and scientific cooperation. It is in line with the country's unswerving opening-up policy.

"Higher-level reform should be the backbone for China's on-going participation in the international economic circulation," Wang said.

On the one hand, the country should ease market access for foreign investors and create a world-class business environment. On the other hand, it should promote high-quality cooperation under the Belt and Road Initiative, he said.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Wen Ying, Liang Jun)

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