Dual Circulation
Xi Jinping's strategy to insulate China's economy from external shocks by boosting domestic demand and self-sufficiency.
A New Strategic Framework
Dual circulation, formally announced in 2020, represents China's most significant economic strategy shift since WTO accession. The concept has two 'circulations': the domestic economy (internal circulation) as the primary driver of growth, with international trade and investment (external circulation) as a supplement. The strategy was a response to converging pressures: the US-China trade war demonstrated the vulnerability of export dependence, COVID-19 disrupted global supply chains, and the technology war showed that reliance on foreign chips and software was a strategic liability.
The intellectual framework draws on China's recognition that its 1.4 billion consumers represent a massive domestic market that has been systematically underutilized. Chinese household consumption as a share of GDP — roughly 38% — is far below the global average of 55-60% and dramatically below the US level of 68%. Unlocking domestic consumption would reduce dependence on exports while creating a self-sustaining growth engine.
