Chinese Economy under the New ¡°Dual Circulation¡± Strategy: Challenges and Opportunities¡ªA Summary of the Annual SUFE Macroeconomic Report (2020¨C2021)

Kevin X.D. Huang (), Shuangjian Li () and Guoqiang Tian
Additional contact information
Kevin X.D. Huang: Department of Economics, Vanderbilt University, Nashville, TN 37235, USA
Shuangjian Li: Institute for Advanced Research, Shanghai University of Finance and Economics, Shanghai 200433, China

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2021, vol. 16, issue 1, 1-29

Abstract: Entering year 2020, the Chinese economy was struck by the COVID-19 outbreak. The unprecedented pandemic, entangled with the already elevated complexities in the nation¡¯s internal environment and external surroundings, aggravated its economic outlook. Internal factors including severe education mismatch in China¡¯s labor force, its vanishing demographic dividend, the declined purchasing power of its middle-income groups, risen leverage ratio of households and enterprises, and soared local government debt reinforced to weaken China¡¯s domestic demand. External factors, especially uncertainty in the China-US relation in the face of the re-shaping global value chain, dragged world economic recovery and thus China¡¯s exports and imports. This summary report highlights some major challenges and opportunities faced by the nation under its new development strategy that stresses internal circulation of domestic economy aided by its interaction with the globe. Our analyses based on IAR-CMM model provide a unified framework for addressing China¡¯s short-, medium-, and long-term issues in an internally coherent manner. Looking into year 2021, our benchmark projection reports an 8.4% annual real GDP growth rate. Alternative scenario analyses and policy simulations are conducted to assess the impacts of potential downside risks and the corresponding policy options for ensuring implicit targets. Through the lens of these analyses, we conclude that a refocus on effective management of internal demand, while deepening structural reforms on supply side and advancing orderly opening up, can help smooth the internal and external circulations of the Chinese economy to achieve high-quality development.

Keywords: macroeconomic outlook; alternative scenario analysis; policy simulation; systemic risk; structural reforms; opening up; dual circulation (search for similar items in EconPapers)
JEL-codes: E01 E17 E27 E37 E47 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://journal.hep.com.cn/fec/EN/10.3868/s060-013-021-0001-0 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fec:journl:v:16:y:2021:i:1:p:1-29

Access Statistics for this article

Frontiers of Economics in China-Selected Publications from Chinese Universities is currently edited by LONG Jie

More articles in Frontiers of Economics in China-Selected Publications from Chinese Universities from Higher Education Press
Bibliographic data for series maintained by Frank H. Liu ().