Thread by @lillianmli

1) Let's talk about something incredible unsexy but very important to understand any Chinese economic policies for the next few years: Dual Circulation.

If you've heard this term thrown around a bunch, go you, so ahead of the curve and so with it

If you haven't- time to learn

2) Dual circulation was first announced in May 2020 and is so-called because it comprises of two types of circulation - internal and external circulation of goods and services.

3) Internal circulation effectively means that the Chinese economy rebalances towards a consumption-led economy from an export-led economy. China wouldn't be 'decoupling' from the world economy anytime soon.

4)The external circulation component means that China wants to continue opening up the economy to foreign investments and free trade. Obvious but Chinese consumers want to consume foreign goods as well.

5) The dual circulation strategy means that Chinese economy will favour domestic consumption and imports as more significant GDP drivers than exports going forward. It's an economic direction that favours the middle class and the working class, and not so much the 1%.

6) In order to have a consumption-led economy, you need to have a surplus income in the hands of many rather than a few (the current Chinese government is not a fan of trickle-down economics).

7) This strategic direction means initiatives that focuses on the following:
- Providing income surplus to the working and middle class
- Prioritizing opportunities to SMEs
- Encouraging balanced consumption-led practices

8) From this perspective, some of the government's current technology policies make more sense. Curbing big tech's monopolistic tendencies is one way to avoid decimating the emerging middle and working classes' businesses. More in lillianli.substack.com/p/annual-refle…

I'll be writing these threads everyday for the rest of Jan, follow me to get these spams on you TL.

Ok twitter, tell me how my interpretation was wrong.