Seemingly perpetual economic growth and China’s status as an international behemoth may be in question as President Xi Jinping shifts priorities. Dubbed an ‘economic introvert,’ the features of the foretold fortress China are being concretely laid into CCP dogma. Ushered into his ground-breaking third term as President and Politburo strongman, Xi aims to redirect China’s perennial path of trade-based growth towards self-sufficiency and ‘common prosperity.’

What is driving the Chinese political focus away from typical economic growth? Why is China becoming more technocratic? Critically, can we predict the effects of a more insular Chinese economy on international players? This is a novel time to investigate the future of China in the global arena, in light of today’s geopolitics and technology.

Both China’s economic size and its far-reaching political influence make it a force to be reckoned with, or better yet, cooperated with. Ever since China’s accession to the WTO in 2001, a host of WTO-mandated economic liberalisation policies have immensely benefited China and the world. China’s share of the global GDP has risen unprecedently from 7.24% to 18.56% since 2000. However, in the face of several perceived threats to China’s national security, Xi is aligning his people, policies, and publicity to be less focused on development- and economy-first decision making. This has involved a de-prioritisation of conventional global integration, replaced with an emphasis on a secure future for China, independent of other nations. Whilst this does not in itself indicate a combative approach, it is a policy or ideological direction not without consequences.

In his speech to the newly constituted 20th Politburo Standing Committee, Xi emphasised ‘comprehensive national security’ as a key national objective moving forward. Professor emeritus Jean-Pierre Cabestan of Hong Kong Baptist University said “The return to Marxism is deeper than many people would have thought,” reaffirming the economic and ideological left-turn Xi is serious about. It may be incidental or intentional that the socialist focus aligns with the self-sufficiency and national security rhetoric and policy directions.

Further to this, the Central Committee (CC), which comprises CCP’s top leadership, is barring the free market from reaping fruitful returns and sowing innovative seeds in the ‘core technologies’ industries. A necessary part of de-internationalising China’s economy, in Xi’s view, is “strengthening the centralised and unified leadership,” confirming the intertwinement of political ideology and economic structuring and outcomes, as evidenced in the themes of the CCP’s 14th Five-year Plan.

China has been a primary target of international protectionist policies and trade sanctions from the US and others. As a result (among a host of further complexities), self-sufficiency for China going forward is almost a self-evident direction, especially given the CCP’s anti-Western predisposition. Interestingly, in the face of such trade-related disputes, Chinese citizenry appear to be swayed towards opposing open trade. This may well aid the social aspect of Xi’s vision of economic transition, including the supplantation of residual imports, viewed as strategic vulnerabilities, with domestic innovation, investment, and production. This explains Xi’s increasing technocratic focus, as specialised technocrats from strategic trade sectors are appointed in the CC. This is one step towards achieving import substitution and indigenising the tech industry in China.

‘Dual circulation’ is an acceleratory policy intended to assist the transition from open trade to complete self-sufficiency. As a transitional political-economic strategy, it aims to shore up China’s domestic production and demand whilst establishing a network of China-reliant stakeholders. Ultimately, China hopes to be a ‘self-sufficient techno-superpower,’ dual circulation forming part of this strategic vision. 

Economic self-sufficiency will further help in protecting China from sanctions, international supply shocks and instability, and trade protectionism. However, Washington’s bipartisan view is that China is undertaking ‘economic imperialism,’ which may more bluntly describe China’s actions. The Belt and Road Initiative is a particular example of this, manifesting as “debt-trap diplomacy.”

So, what observable shifts are occurring as part of the CCP’s long-term vision of restructuring? The new Politburo Standing Committee represents President Xi’s strategic consolidation of power through loyalists who align with his dogmatic and ambitious goals for the nation. This high-level political body enables long-term economic shifts through social and ideological influence and dictation. In other words, China’s authoritarian government, by design, increasingly has the capacity to swiftly achieve fundamental economic restructuring and face few politically relevant dissenting voices. Revealing the ruthless efficiency of one-party governance, as well as such a system’s vulnerability to ‘visionary’ tyrants, Xi is gambling with decades of economic and political progress and risking alienating China from the world. Implementing transformational policies, Xi is sure to disturb the global spider’s web of economic ties.

China’s ‘securitisation’ predominantly focuses on technology, finance, food, and energy. A 2019 McKinsey report examined eight key factors of the relationship between China and the rest of the world. It found that spending on Chinese domestic R&D boomed in scale from $9 billion in 2000 to $293 billion in 2018, clearly reflecting China’s changing national priorities; this number is bound to continue skyrocketing. Further to this, China plans to invest $1.4 trillion in advanced technologies, including semiconductors, between 2020 and 2025.

China delayed the release of macroeconomic data in the Third Quarter of 2022 by one whole week, on top of stopping the reporting of thousands of economic statistics since Xi’s election. Such reduced visibility on key economic metrics may be a sign of China’s exclusion of international stakeholders. The prevailing international economic system is globalised; therefore, an insular China with secure domestic industries would seem to be problematic for innovation and trade. However, based on the dual circulation model, China by no means wants to give up their powerful global market share. Instead, Xi seems to be investing in China’s capacity to produce the world’s innovations domestically, hence the booming tech and R&D investment and technocratic political focus. This will not only meet Chinese needs but get the world hooked.

Foreign direct investment (FDI) net inflows as a percentage of GDP have been steadily declining since the 1990s. Of course, China’s economy has grown greatly over this period, lowering the percentage share FDI has in GDP, but it may imply foreign investors’ decreasing interest in China. It is theorised that the lifecycle of a foreign firm in China begins with incentivised entry, followed by information theft enabling domestic companies to produce similar innovations at high scale and low cost, ultimately driving out the foreign firm. In the long run, this gives great innovative and industrial knowledge to China, ensuring domestic success and paving the road to self-sufficiency.

The world quickly integrated China into the economic order in the past decades, who now has the strongman bargaining power that Xi himself also governs with. However, the prominence of cheap labour and efficient technology globally diminishes China’s centrality in supply chains. Ultimately, China’s (future) position internationally results from political, social, ideological, and economic decisions by the CCP. As they transition to complete self-sufficiency, global trade will likely be sustained, though vulnerable economies should be weary of China’s strategic aid. A de-globalised domestic market in China can serve as a test run; maybe an unprecedented global economic path awaits us.