Navigating global shifts and forging a path for emerging economies

Staff members sort packages at a logistic center of Zaozhuang branch of China Post in Zaozhuang City, east China's Shandong Province, Nov. 11, 2024. [Photo/Xinhua]

By Xin Ge

Five years ago, Chinese President Xi Jinping introduced China's "new development pattern" during a pivotal conference addressing the nation's medium and long-term economic and social development. This strategic framework elevates the domestic economic cycle (also known as the internal circulation) to a primary role, while strategically enabling mutual reinforcement between domestic and international activities (also known as thedual circulation). This approach represents both a considered response to profound transformations in the global economic arena and a decisive move by China to proactively chart its own course forward.

The global landscape is currently undergoing transformations unseen in a century, marked by heightened geopolitical friction, a surge in protectionist measures, the complexities of technological decoupling and significant restructuring of global supply chains, which are collectively redefining the international division of labor.

Within this dynamic context, China's new development pattern serves a dual purpose: It acts as an anchor, providing stability against external volatility, while also aiming to buttress global economic confidence through a steadfast commitment to high-level openness. Furthermore, this strategy may offer pertinent insights for other emerging economies as they navigate their unique developmental journeys.

Since 2009, global trade protectionism has impacted an estimated 3.2 percent of worldwide exports. Concurrently, U.S.policies, including technology containment measures targeting China and supply chain "friend-shoring," have intensified the fragmentation of the international economic and trade system.

In response, China has focused on leveraging the vast potential of its 1.4 billion-peopledomestic market. By integrating the expansion of domestic demand with supply-side structural reforms, it seeks to establish a dynamic equilibrium for the internal circulation.

Indications of this strategic pivot were evident during the initial two years of the 14th Five-Year Plan, where domestic demand became a key driver ofeconomic growth. Shifting consumer preferences have fueled vigorous expansion in burgeoning sectors like new energy vehicles (NEVs) and cultural tourism.

This reinforcement of the domestic market not only alleviates pressures stemming from contracting external markets but also stimulates industrial upgrading. This is achieved through the deliberate cultivation of "new quality productive forces," encompassing cutting-edge fields such as artificial intelligence and quantum computing.

Geopolitical tensions have starkly highlighted the inherent fragility of globalized supply chains. Consequently, China has accelerated its initiatives to forge resilient industrial and supply chain ecosystems with stronger domestic foundations. These efforts are channeled through major strategic projects and livelihood programs, complemented by investments in new infrastructure and new urbanization.

Tangible results are emerging. For instance, the self-sufficiency rate within the domestic semiconductor industry saw a marked increase from just 15 percent in 2020. Additionally, the "east data, west computing" project is enhancing the nationwide allocation of digital infrastructure resources. Bolstering supply chain resilience in this manner diminishes susceptibility to external disruptions. Simultaneously, it boosts the overall efficiency of the domestic economy via enhanced regional coordination.

An automatic container terminal of Qinzhou Port and a railway container distribution center in Qinzhou City, south China's Guangxi Zhuang Autonomous Region, May 11, 2023. [Photo/Xinhua]

Furthermore, amidst a retreat from traditional globalization patterns, China remains committed to high-level institutional opening-up. This involves transitioning its approach from focusing merely on the flow of goods and production factors towards embracing international rules, regulations and standards.

Examples include the implementation of "zero tariff" and "low tax rate" policies in the Hainan Free Trade Port and efforts within the Shanghai Pilot Free Trade Zone to align with the digital trade provisions of the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership.

These initiatives signal China's deepening engagement in shaping the evolving landscape of international regulations. In 2024, trade (imports and exports combined) with the Belt and Road Initiative (BRI) partner countries constituted more than half of China's total foreign trade, demonstrating how China is forging new avenues for international engagement via South-South cooperation.

Despite heightened U.S.restrictions on investment in China, events such as the Boao Forum for Asia (BFA) Annual Conference 2025 and the 2025 Zhongguancun Forum continue to draw significant foreign participation. Data indicates that the return on foreign direct investment in China over the last five years has averaged 9 percent, markedly outpacing global benchmarks.

This dynamic approach, sometimes characterized as "exchanging market access for technology" and "driving upgrades through openness," offers a potential blueprint for non-zero-sum cooperation within the global economy.

For other developing nations, China's pursuit of its new development pattern yields at least two key insights:

First, it underscores the critical synergy between robust state capacity and astute industrial policy. China's experience suggests that achieving rapid development for latecomer economies hinges on strengthening the interplay between state capacity, sound institutional frameworks and targeted industrial policies.

This involves concentrating resources to overcome critical technological hurdles (e.g., in semiconductor manufacturing and aerospace) while simultaneously fostering South-South cooperation in infrastructure and digital technology through initiatives like the BRI. The successful implementation of projects,such as the Jakarta-Bandung High-Speed Railway in Indonesia and the development of Egypt's new administrative capital,provides tangible examples of the potential applicability of a model combining state direction with market dynamism.

Moreover, ithighlights the growing importance of strategic autonomy within an emerging multipolar world order. Nations in the Global South are increasingly moving beyond passively adopting established Western norms. Instead, they are amplifying their collective influence through mechanisms such as the expansion of BRICS and regional trade agreements like the Regional Comprehensive Economic Partnership.

China's dual circulation strategy allows it to navigate the complexities of geopolitical alignment. Meanwhile, through promoting diverse forms of cooperation, such as the Cross-Border Interbank Payment System for RMB transactions, it offers alternative pathways and options for emerging economies.

The Global South is transitioning from its historical position as a passive participant to becoming an increasingly active force in shaping global norms and rules. Within this transformation, China's new development pattern is emerging as a crucial support point, or perhaps even a fulcrum, driving this significant evolution.

Xin Ge, a special commentator on current affairs for CGTN, is a research fellow at the Institute of Public Policy and Governance, Shanghai University of Finance and Economics (SUFE), and a chair associate professor at the School of Public Economics and Administration, SUFE.