The strategy aligns with Xi’s broader national security priorities and preparation for ‘extreme-case’ scenarios, according to a new report.
Chinese Communist Party (CCP) leader Xi Jinping has initiated a strategic shift toward an economic model that could protect China’s economy from external shocks, according to new research.
The strategy is “designed to bolster national self-sufficiency and resilience against external shocks, and ultimately allow the nation to withstand ‘extreme situations’ including protracted armed conflict,” the paper reads.
The paper notes that U.S.–China tensions and other major global events, such as the Russian invasion of Ukraine and the COVID-19 pandemic, have prompted Beijing to shift its economic policy. The COVID-19 pandemic’s disruption of the global economy and supply chains reinforced the need for a “fortress economy.”
Thus, according to the report, the CCP has since emphasized “dual-economic circulation” to shift the economy from export dependence to focus on strengthening domestic capabilities while maintaining international trade. This approach aims to reduce vulnerability to external shocks and ensure economic stability.
This strategy also aligns with Xi’s broader national security priorities and preparation for “extreme-case” scenarios, according to the report. The CCP’s approach involves food, energy, supply-chain security, civil defense mobilization, and strategic reserve infrastructure development.
“This research contributes to understanding China’s strategic intentions and provides a foundation for further exploration of the implications of China’s fortress economy on global economic and geopolitical dynamics,” the author wrote.
Since the COVID-19 pandemic, the Chinese economy has faced multiple problems, particularly the property crisis marked by the bankruptcy of China’s real estate giant Evergrande. The company is the world’s most indebted firm, with $340 billion in debt.
The report points out that the root of China’s economy is its “persistent structural reform gap,” which results in “lagging behind top OECD economies in most market dimensions,” and suggests that structured reform is needed. “The Chinese economy is suffering in part because the [Chinese Communist] Party continues to prioritize ideology over economic dynamism,” the report reads.
Due to its weak performance, Beijing’s ambition to dethrone the United States as the world’s largest economy by the end of the 2020s “will not happen in this century, let alone this decade,” it notes.