The 17th China-ASEAN Expo and the China-ASEAN Business and Investment Summit had successfully held in Nanning, the capital city of south China's Guangxi Zhuang Autonomous Region in November of last year. I had an opportunity to attend this mega event jointly sponsored by the Ministry of Commerce of China, the competent economic and trade departments of the 10 ASEAN governments, and the ASEAN Secretariat, undertaken by the people's Government of Guangxi Zhuang Autonomous Region.
China - ASEAN Expo is especially important this year because it is the first collaboration between ASEAN countries and Chinese businessmen since the signing of the RCEP agreement, covering a market of 2.2 billion people and a total output of $26.2 trillion, which accounts for about 30 percent of the world's population, as well as the global economy. It is also larger than what's covered under the United States-Mexico-Canada Agreement (USMCA) and the European Union.
On 15 November 2020, the Regional Comprehensive Economic Partnership (RCEP) was signed after eight years of negotiations. Of the $2.3 trillion in goods flowing between RCEP signatories in 2019, 83 percent moved between those already holding a trade agreement, according to the Economist. The Regional Comprehensive Economic Partnership is a free trade agreement initiated by Indonesia, between the Asia-Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam. ASEAN already has a free trade agreement with China, and a combined free trade agreement with Australia and New Zealand.
On 8 October 2003, at the 7th China and ASEAN (10 plus 1) Summit, Chinese Prime Minister Wen Jiabao proposed that the CHINA-ASEAN Expo should be held every year after 2004 in Nanning city, Guangxi, and the CHINA-ASEAN Business and Investment Summit should be held at the same time. His idea has been widely welcomed by the leaders of the ten ASEAN countries. Since November 2004, the CHINA-ASEAN Exposition and CHINA - ASEAN Business and Investment Summits have been successfully held.
The central government of China recently formulated, discussed, and eventually released priorities to guide the social and economic growth of the country for the next five years and beyond. On Oct. 29, the Fifth Plenary Session of the 19th Central Committee of the Chinese Communist Party ended. It adopted recommendations from the Committee for the formulation of the 14th Five-Year Plan for National Economic and Social Growth (2021-25) and the Long-Range Goals for 2035.
The fifth plenum of this year, the second such plenum chaired by President Xi Jinping saw the publication of two different blueprints.
- 14th FYP (2021-2025): Set targets for the first five-year cycle in which China is creating an all-round well-off society; and
- 2035 vision (2021-2035): A mid-term vision to concentrate on socialist modernization.
The buzzwords of five years' plan are Dual Circulations, High Quality Development, Innovation Driven, Modernization, and Technology Self-dependent.
'Dual Circulation' is an umbrella term that applies to the economic development model of China, which is expected to be the main theme of the Central Committee of the Communist Party of China Plenary Session to be held in Beijing from 26 to 29 October 2020.Many claims that the notion of "dual circulation" would form the basis of China's 14th Five-Year Plan (2021-25), to be launched in March 2021, and to set long-term targets for 2035.
At a meeting of the Central Committee's Political Bureau in May 2020, the idea was introduced to bring the economy back on track, and the Chinese government put forward the concept of "dual circulation" or "double circulation" or "double development dynamic." Since then, it has become a centerpiece of discussion about the future of Chinese economic development.
What is the dual circulation strategy?
"Dual circulation" refers to domestic consumption and innovation, referred to as the main pillar as "internal circulation" as well as exports and foreign trade, or "external circulation." The term has two equally strong components: "internal circulation," referring to domestic economic operations, and "external circulation," referring to the economic relations of China with the outside world.
President Xi said "internal circulation" will be supported by "external circulation".
Why dual circulation concept adopted?
The focus of the Chinese economy has been on "outer circulation" for the last 40 years, allowing unprecedented high-speed growth in China. During this period, on average, China's annual GDP growth was close to 10 percent, which the World Bank recognized as the fastest expansion by a major economy in history.
There are other explanations for the dual circulation approach to be taken into accounts, which are below.
- The corona virus demonstrated the threats and weaknesses associated with deep trade integration, leading countries to reduce their dependency on other economies.
- Business momentum and capital outside China are decreasing dramatically, suggesting a declining potential for economic growth.
- The core technology of China is based upon the United States. For China, Innovation has posed a serious problem. To fix this, it is important to turn from the "market for technology".
- Trade wars, launched by the Trump administration of the United States, have created uncertainties not only for the United States and China but for the entire world economy. China is facing a deteriorating external environment, which started in 2017 with trade tensions with the U.S. Such strains have extended to areas of technology, economics, media, and geopolitics.
China's trade-to-GDP ratio slid from 64.5 to 35.7 percent from 2006 to 2019. Consumer spending contributed 57.8% to the GDP of the country in 2019, according to the National Development and Reform Commission, being the leading driver of economic growth for six consecutive years.
China - ASEAN Expo is providing the impetus for China's "Dual Circulation" strategy to promote the "internal circulation" of China as the mainstay, as well as "external circulation." exports, and global trade. It also offers economic growth, prospects for companies from these areas at a time when the COVID-19 pandemic adds to uncertainties and challenges.
A dialogue conference between the Communist Party of China and the political parties of the countries of Southeast Asia was held during this large expo meeting. Nearly 40 ruling parties and major opposition parties in Southeast Asian countries, including more than 20 party leaders, five speakers and Chinese ambassadors to ASEAN countries, have been linked via video. The ASEAN ambassadors to China attended the meeting on the spot, and conducted full exchanges on topics such as "Combating the Challenge of the Epidemic", "Building a Prosperous Silk Road", "Promoting the Economy and People's Livelihood Together".
At the opening session, Chinese President Xi Jinping delivered a video address, thoroughly reviewing the fruitful achievements of China-ASEAN cooperation in recent years, and highly appreciating that China-ASEAN relations have become the most effective and dynamic model of regional Asia-Pacific cooperation and have become the building of a common future society for humanity.
President Xi Jinping put forward four proposals for building a closer China-ASEAN community with a shared future: enhancing strategic mutual trust and in-depth docking of development plans; enhancing economic and trade cooperation and accelerating the overall recovery of the regional economy; enhancing technological innovation and deepening digital economic cooperation; enhancing cooperation in the fight against the epidemic, Strengthen public health capacity building.
At the four-day event, a total of 86 investment projects worth 263.87 billion Yuan (about 40.1 billion U.S. dollars) were signed at the expo, an annual increase of 43.6 percent, according to data released at the closing ceremony by the expo secretariat. Investment ventures accounted for 85.3 per cent of the total in the fields of health, big data, logistics, digital manufacturing, new materials, new energy and finance. For 1,668 enterprises, including Fortune 500 and industry-leading companies, this year's expo set up 5,400 booths. Furthermore, 1,956 companies from home and abroad basically participated in the event. During the expo, more than 150 trade and investment promotion activities were carried out both online and offline.
A total of 10 high-level forums, covering areas such as the free trade zone, health, information port, finance, international production capacity, technology transfer, statistics, and electricity, were held within the framework of this year's China-ASEAN Expo and eight during the conference. The organization of the series of forums has strengthened the process of collaboration in different areas.
South China's Guangxi FTZ stepped up efforts during the China-ASEAN Expo to continue promoting trade facilitation. Local authorities in the Guangxi Zhuang Autonomous Region of South China have implemented 29 concrete steps to further improve trade facilitation in the Guangxi Pilot Free Trade Zone (FTZ).Five essential things are concerned: facilitation of customs clearance, tax laws, control of border trade, operation of ports, and intelligent port management. Further priorities will be given to simplifying customs clearance procedures, optimizing the method of inspection and quarantine of goods and improving port intelligence.
China is pushing for a dual-circulation development pattern with a view to the future, and Southeast Asia will become a significant region. China and ASEAN should continue to improve the coordination of political communication and development planning and to encourage bilateral investment and trade cooperation. Meanwhile, China and ASEAN should also boost the quality of economic and trade cooperation through the implementation of outstanding joint programs in the fields of e-commerce, artificial intelligence, smart cities, 5G, and other sectors, thereby fostering regional and global economic recovery and development.
Mohammad Saiyedul Islam is a Doctoral Fellow in the School of International Trade and Economics at Jiangxi University of Finance and Economics, China.