Xi’s Post-Virus Economic Strategy for China Looks Inward

The Chinese leader’s latest approach calls for a more robust domestic economy to insulate growth from tensions with the United States.

By Chris Buckley

He inspected fields of corn amid jitters about food supplies. He visited steel works trying to overcome a slump in profits. He toured an innovation center at a time when President Trump has raised barriers against China’s technological takeoff.

China’s leader, Xi Jinping, has used his recent trips to highlight a warning: The country must retool its economy to be more self-sustaining in a post-pandemic world of uncertainty, weakened demand and hostility.

China needs its people to spend more and its manufacturers to be more innovative, Mr. Xi has said, to ease dependence on fickle foreign economies. Most pressing, official media comments on Mr. Xi’s strategy have said, China must be ready for sustained acrimony with the United States that could put at risk its access to American consumers, investors and know-how.

“The world has entered a period of turbulence and transformation,” Mr. Xi told an audience of prominent Chinese economists brought to the Communist Party’s headquarters in central Beijing late last month. “We face an external environment with even more headwinds and countercurrents.”

China must “make breakthroughs in core technologies as quickly as possible,” Mr. Xi said.

Mr. Xi has called his new initiative a “dual circulation” strategy. The grandly technocratic name, which he first used in May, means China should rely on a robust cycle of domestic demand and innovation as the main driver of the economy while maintaining foreign markets and investors as a second engine of growth.

To some, Mr. Xi’s latest initiative looks like a glossy reboot of longstanding efforts to overhaul the Chinese economy. Chinese leaders have promised since at least 2006 to make domestic consumer spending a bigger share of economic activity, reducing reliance on exports and infrastructure building — with mixed success.

But Mr. Xi’s new strategy demands to be taken seriously, even if its implications are still hazy. He has cast it as a security imperative to keep China growing in an era of global turbulence, and that new geopolitical urgency will raise pressure on officials to show results.

“This policy has a lot to do with China’s changing international environment, particularly the deterioration of Sino-American relations,” Yao Yang, the dean of the National School of Development at Peking University, said in an emailed response to questions. “China needs to prepare for the worst-case scenario, in which the U.S. seals off China in certain tech areas.”

Chinese officials and experts have already been rushing out rival proposals to flesh out Mr. Xi’s strategy. Some have urged the government to ramp up support for Chinese technology companies. Others have called for reducing barriers to foreign investors, to help ensure that China keeps its friends and is not cut off.

Source: Read Full Article