"China to Emphasize 'Self-Reliant Economy' Over Next 5 Years... Domestic Companies Must Prepare"

[Asia Economy Reporter Jeong Hyunjin] China’s economic policy over the next five years is expected to focus on transforming the domestic market into the driving force of economic growth and emphasizing economic security, with the keyword being a 'self-reliant economy,' prompting domestic companies to prepare accordingly.

The Korea International Trade Association’s International Trade and Commerce Research Institute forecasted in its report released on the 20th, titled "From Crisis to Self-Reliance: Economic and Trade Policy Outlook and Implications Based on China’s 14th Five-Year Plan," that China’s economic stance will be based on two pillars: the 'dual circulation' strategy, where domestic demand leads growth supported by exports, and 'innovation-driven development,' which reduces external dependence through technological self-reliance in core industries.

The KITA explained, "This is a strategy to discover future growth engines internally, prepare for external uncertainties such as trade disputes with the United States, and enhance overall economic self-reliance." It interpreted that China, having experienced the US-China trade dispute and major advanced countries’ containment policies during the 13th Five-Year Plan period from 2016 to 2020, and recognizing the limitations of its outward-oriented economic growth model reliant on exports and investment, has reflected this internal awareness in its new countermeasures this time."

(Data provided by Korea International Trade Association)

KITA also projected that China will continue reforms of state-owned enterprises and strengthen intellectual property rights protection, while conflicts with external parties such as the United States will become more entrenched in the mid to long term. Furthermore, the separate mention of the 'economic security' sector in the 14th Five-Year Plan indicates China’s clear intention to appropriately respond to external trade conflicts and protect its national interests, which KITA emphasized as noteworthy.

Additionally, since China has declared it will reach peak carbon emissions by 2030 and achieve carbon neutrality by 2060, it is expected to provide benefits to foreign companies with technological capabilities in the environmental sector. The trend of expanding openness is also anticipated to continue, including reducing restrictions on foreign investment across industries.

KITA stressed, "Accordingly, our companies should actively target the market for high-end intermediate and consumer goods following the domestic demand expansion trend under the dual circulation policy, while actively utilizing the advantages of openness brought by the implementation of the Regional Comprehensive Economic Partnership (RCEP) and the expansion of sectors allowing foreign investment." It added, "We must also prepare response scenarios keeping in mind the possibility of continued US containment of China due to China’s strengthening of economic security and attempts at technological self-reliance in core industries."

Researcher Lee Won-seok of the Korea International Trade Association said, "Through this plan, China’s unique economic operation model, where the state controls the entire domestic economy including private enterprises, will evolve more sophisticatedly. We must closely monitor China’s policies, which will lead the global economic recovery post-COVID-19, maximize opportunities, and identify and prepare for threats in advance."

This content was produced with the assistance of AI translation services.