Call it Atmanirbhar China. Self-reliance isn’t only the flavour of the moment in India, but increasingly the phrase of choice in China, where a leadership, chastened by the impact of COVID-19 , a trade war with the United States , and a reassessment by many countries of their dependence on Chinese supply-chains, is making an accelerated push to reframe the nature of China’s engagement with the world.
At the heart of this push, as President Xi Jinping outlined in an essay published in the November edition of the Communist Party’s official journal, is an aim to essentially make China less reliant on the world and to make the world more reliant on China.
Doing so, in Mr. Xi’s view, is particularly important when it comes to what he described as “trump card” technologies that can be decisive in a conflict.
‘Dual circulation’
“Dual circulation” is the name that Beijing has given this approach favoured by Mr. Xi, of boosting the domestic economy (or internal circulation) while recalibrating China’s external relations (the other circulation) – an anodyne term that blurs the increasing importance of self-reliance in Beijing’s outlook today.
In the newly published essay, which was based on an internal speech Mr. Xi delivered in April that wasn’t publicised, the Chinese President said “the strategy of domestic demand expansion” should be China’s priority, and “building a complete internal demand system bears on China’s long-term development and long-term peace and stability.”
“Economic globalisation has encountered headwinds, and this pandemic may intensify counter-globalisation trends,” he said. “With inward-turning tendencies clearly on the rise among nations, there could be significant changes in the external environment facing China’s development. Implementing the internal demand expansion strategy is a necessity for responding to the pandemic’s impact.”
The second pillar of this strategy, as he put it, was to “optimise and stabilise production chains and supply chains.” The pandemic, he said, was “a stress test under combat conditions” and had served warnings of the dangers of decoupling.
“In order to safeguard China’s industrial security and national security, we must focus on building production chains and supply chains that are independently controllable, secure and reliable, and strive for important products and supply channels to all have at least one alternative source,” he said, listing sectors such as high-speed rail, electric power equipment, new energy, and communications equipment where China needed to preserve its advantages.
The most revealing part of Mr. Xi’s essay was his statement that China “must tighten international production chains’ dependence on China” with the aim of “forming powerful countermeasures and deterrent capabilities”. This would give China leverage should countries threaten to limit access to key technologies, as the U.S. has done with semiconductors.
The idea, in his view, is for China to “rely more on the domestic market”. He said there was “no contradiction” between doing so and opening up, because domestic and external “circulation” would be “mutually reinforcing”.
Self-sufficiency
That, however, is not how India and many of China’s biggest trading partners see it, instead viewing a push that will increasingly prioritise self-sufficiency.
The key difference with India’s own “self-reliant” emphasis is that China is at the same time embracing new trading arrangements such as the Regional Comprehensive Economic Partnership (RCEP), from which India withdrew last year, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the other big regional trading bloc that succeeded the TPP after America’s withdrawal, which Mr. Xi has expressed interest in joining.
Trading agreements, in Beijing’s view, will open new markets and help increase trade dependencies on China overseas — China is already the biggest trading partner for many of the RCEP’s members — even while China is moving to erect ever higher non-tariff barriers for foreign firms, particularly in sensitive sectors — all while positioning itself as a defender of globalisation.
In fact, agreements like the RCEP failing to adequately address this contradiction was one key reason why India ultimately withdrew from the negotiations, receiving no assurances of a level playing field, even as it was asked to open up its economy.
Published - November 26, 2020 12:52 pm IST
