China has a plan for dealing with an unstable world

As China’s leaders get ready to release their national development plan for the next five years, some government advisors emphasize the priority is building up China’s domestic strength. Chinese authorities have stepped up their efforts to shift the economy from one reliant on exports to one driven by domestic consumption. The country faces the shock of the coronavirus pandemic to global growth this year as well as tensions with the U.S. The U.S. has been China’s top trade partner.

“China’s economy needs to continue to develop. If exports decline (as a result of shrinking global demand), then they will be consumed domestically,” Justin Yifu Lin, a counsellor to China’s top executive body, the State Council, said at a briefing with reporters Tuesday. That’s according to a CNBC translation of his Mandarin-language remarks. In the same way, U.S. pressure on Chinese companies such as Huawei mean these businesses must also look more at the Chinese market, Lin said. He is also honorary dean of the National School of Development at Peking University, and formerly the chief economist of the World Bank.

The greater emphasis on the domestic Chinese market is part of a new term — “dual circulation” — that has emerged as leaders deliberate on the next five-year development plan set to kick off in 2021. The economic plan will be the 14th such roadmap for national priorities.

Tensions between China and the U.S. have escalated in the last two years, beginning with trade and spilling over into technology and, to some extent, finance. Many economists predict China will surpass the U.S. as the world’s largest economy in the next several years, when the 14th five-year plan will be in place.

The biggest challenge is uncertainty caused by uncontrollable external factors, ranging from natural disasters to protectionism. China also faces many challenges at home. The services sector, which the advisors on Tuesday said they expect will account for a greater portion of the economy in the future, remains among the hardest hit by the coronavirus pandemic.

China has a plan for dealing with an unstable world, CNBC, Sep 30