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Historically, China has shown a tendency to enact rapid changes in response to external pressures or implement difficult domestic reforms amid the complexities of the world. In 1999, then Chinese premier Zhu Rongji strategically pursued China’s entry into the World Trade Organization to leverage external forces for a transformative shift towards a market economy.
Similarly, the challenges posed by the new Trump administration’s containment strategy could compel China to implement essential reforms to revitalise its economy and navigate the evolving global economic landscape.
In anticipation of escalating economic tensions with the US, China introduced the dual circulation strategy in 2020. This strategy prioritises the domestic market as the primary driver of growth while fostering synergy with external markets. Despite initial criticisms of this inward-focused approach, dual circulation aims to create a viable solution for a China seeking to build resilience against external shocks.
There have been some positive developments in this direction. Despite low consumer confidence, China’s consumption expenditure in the first half of this year contributed to 60.5 per cent of economic growth, boosting GDP growth by 3 percentage points, according to Xinhua News Agency.