'Dual circulation' a catchphrase at import expo
Exhibitors and traders from home and abroad at the import expo
This year’s China International Import Expo opened shortly after the 14th Five-Year Plan for 2021-2025 and Long-Range Objectives Throughout The Year 2035 were formulated. Both emphasized and prioritized the new development structure “dual circulation.”
It became a catchphrase at the import expo. Shanghai Daily asked economist Sun Lixing from the Shanghai Academy of Social Sciences what it is and why the import expo is an important window and platform for it. Sun is the director of the international investment division at the academy’s Institute of World Economy.
SD: How do we understand “dual circulation?” Was there no circulation before?
Sun: China had a domestic circulation and an overseas circulation, but they were two relatively separate cycles. Now they will be better connected and complement each other, like the Arabic number 8. Previous export-driven growth had little impact on the domestic market, as many factories imported materials, produced here and sold them in overseas markets. Under dual circulation, foreign products entering China’s expanding domestic market will force local competitors to better themselves, what we call the catfish effect. They will then have more competitiveness rather than just cheap labor.
SD: How is that good for foreign companies and investors?
Sun: The spurring demand in the Chinese market. Chinese consumers have changed. For my generation, many products were simply not available. Later, we wanted better-quality products. Now, consumers are asking whether this product matches their individualized need. These are aspects that many foreign companies have many advantages.
As long as the products are good, it will spur demand in the domestic market. China is a big trading country, and is becoming a strong trading country, meaning it is no longer just about quantity. To achieve that, increasing imports is anticipated.
Dual circulation doesn’t imply changes in opening-up, instead, it will be further opened up. The difference is that it will be an institutional opening-up, meaning bridging with international rules.
There have been ongoing measures including ending limits on foreign ownership in some industries, further opening financial services, and further cutting the “negative list,” among others. That is certainly good news for foreign investors.
For many companies, it may well be business unusual, as they look forward to increasing demand in second- and third-tier Chinese cities.
SD: What role does the import expo play in this?
Sun: It is a showcase that Chinese market is open to the world, that consumers are more demanding and the country is further opening up, matching well with the core of “dual circulation,” making it an important window and platform.
That is why many companies choose to launch new products here. It is a gateway into the Chinese market. It is also no longer a fair for just its duration, but a year-round platform through the “6+365 days” One-stop Trading Service Platform, offering more opportunities for foreign products.
It will also bring spillover effects, as foreign companies learn more about the Chinese market and business environment through the import expo, and may turn from exhibitor to investor to develop further in this market.
This year, due to the pandemic, it is held in a combination of physical and virtual forms, tapping into China’s strong e-commerce economy, creating more opportunities.
