Conference Publication Details
Mandatory Fields
Constantin Holzer
The 24th IAGBT-KITRI Biannual Research Conference on “Embracing Breakthrough Innovation and Reinvention in Global Business and Trade”
China-EU Relations: China’s Dual Circulation Theory and its Impact on the EU’s Economic Security
Optional Fields
China-EU relations, dual-circulation theory, economic security
Amidst changing international and domestic environments due to the fallout of the US-China trade war and the economic downturn related to the Coronavirus, China recently turned to further emphasize economic and technological self-reliance (自力更生) over convergence with international norms (与国际接轨). With this in mind, China has announced the new theory of dual circulation (双循环经济理论), which divides the economy into a larger domestic base and an additional foreign economic cycle. This conceptualization is expected to be of key relevance for China’s 14th Five-year plan from the beginning of the year 2021 onwards. How will the EU’s economic security be affected by this change of strategy? This paper is going to explore possible challenges against the backdrop of multiple dimensions: 1. The BRI as China’s overall strategy of foreign economic engagement for the purpose of securing access to natural resources and foreign markets. 2. China’s homegrown innovation ecosystem and its even stronger focus on domestic innovation and technological self-reliance during the 14th Five-year plan. 3. The guiding role of the Chinese State as economic facilitator in industries of national importance. 4. The renewed primacy of national security over aspects of the economy, especially with regards to foreign engagement and international connectivity. How should the EU react to this new change of strategy and how will it shape EU-China relations? What can the EU do to dissuade China from engaging in further de-coupling, trade protectionism and fragmentation of the economy? This article argues that Europe’s interest is best served by positioning herself as an autonomous actor while pursuing a strategy that stands for multilateralism and a geopolitical alternative to US hegemony. China’s new focus on its domestic consumer base and technological self-reliance can have a destabilizing effect on European exports both in terms of quantity as well as with regards to substituting European exports with Chinese homegrown products. Therefore, Europe needs to prepare a thorough strategy to address possible challenges associated with China’s new strategy, so as to safeguard its economic security in the future.
Grant Details