External Circulation (外循环) is the global-facing component of China’s Dual Circulation Strategy, emphasizing the role of international trade, investment, and cooperation in sustaining economic growth. It complements Internal Circulation by leveraging China’s deep integration into global markets to support domestic development. The strategy reflects a balanced approach: relying on global economic engagement while ensuring that internal markets are strong enough to weather external shocks.
Key priorities of Wài Xúnhuán include:
Trade and Investment:
Expanding exports and attracting foreign investment to bolster economic growth.
Technological and Knowledge Exchange:
Leveraging international collaboration to advance innovation and competitiveness.
Global Economic Leadership:
Strengthening China’s influence in shaping global trade norms and multilateral agreements.
China’s integration into the global economy, particularly after its accession to the World Trade Organization (WTO) in 2001, has been central to its rapid economic rise. By the 2010s, China had become the world’s largest exporter and a major hub for global supply chains. However, the U.S.-China trade war and disruptions caused by the COVID-19 pandemic highlighted vulnerabilities in over-reliance on external markets.
The focus on External Circulation seeks to maintain China’s global economic leadership while addressing these challenges, ensuring that external engagement complements domestic development.
1. Enhancing Global Trade:
Strengthening export industries to sustain economic growth.
Expanding partnerships through initiatives like the Belt and Road Initiative (BRI).
2. Attracting Foreign Investment:
Creating favorable conditions for international companies to invest in China, particularly in high-tech industries.
3. Advancing Global Connectivity:
Supporting infrastructure projects that facilitate international trade and collaboration.
4. Multilateral Cooperation:
Promoting a fair and inclusive global trade system that reflects the interests of developing nations.
For China, External Circulation represents a commitment to global engagement and a recognition of the interconnectedness of modern economies. It aligns with China’s aspiration to transition from being the “world’s factory” to a leader in innovation and international economic governance.
Key Achievements and Progress:
Global Trade Leadership:
China remains the world’s largest exporter, with trade volume reaching $6.05 trillion in 2021.
Belt and Road Initiative (BRI):
Connecting over 140 countries through infrastructure projects exemplifies China’s emphasis on global connectivity.
Foreign Direct Investment (FDI):
In 2020, China surpassed the U.S. as the world’s largest recipient of FDI, reflecting its ongoing appeal to international businesses.
1. Belt and Road Initiative (BRI):
By investing in infrastructure projects across Asia, Africa, and Europe, China strengthens trade routes and fosters economic ties.
2. Export Growth in High-Tech Industries:
Sectors like electronics, green energy, and AI have become key drivers of China’s export economy.
3. Global Trade Agreements:
China’s participation in the Regional Comprehensive Economic Partnership (RCEP) underscores its commitment to multilateral cooperation.
4. Foreign Investment Policies:
Special Economic Zones (SEZs) and policies encouraging FDI reflect China’s proactive approach to attracting global businesses.
5. International Standard-Setting:
China’s involvement in shaping global standards for 5G, AI, and renewable energy highlights its leadership in emerging industries.
Global Engagement vs. Dominance:
Americans may perceive Wài Xúnhuán as an attempt to dominate global markets, overlooking its role in complementing domestic growth.
Trade and Technology Competition:
The emphasis on advancing high-tech industries might be seen as a threat, rather than a strategy for mutual benefit and global progress.
Belt and Road Initiative:
While often viewed skeptically in the West, the BRI reflects China’s vision of win-win cooperation through infrastructure development.
External Circulation resonates as a strategy that balances China’s domestic needs with its global aspirations. It reflects the nation’s confidence in leveraging its strengths to benefit both itself and the world. By prioritizing trade, investment, and cooperation, Wài Xúnhuán ensures that China remains a key player in the global economy while fostering sustainable development at home.