Speaking on Sept 1 at the 15th meeting of the central committee for deepening overall reform, President Xi Jinping stressed that China needed to step up efforts to create a new development pattern whereby domestic and foreign markets can boost each other, with the domestic market as the mainstay; namely, the “dual circulation” growth model. This pattern is China’s strategic decision based on its own development phases, environment and conditions. In the meantime, the country will need to deepen reforms and further open up so as to provide a strong impetus for creating the development pattern.
Although Hong Kong is still beset by the coronavirus pandemic, with its economic activities and daily life yet to return to normal, the SAR government and all sectors of the community must think about where Hong Kong stands in the nation’s new development pattern and what role it should play moving forward.
As domestic circulation will be the backbone of the “dual circulation” development pattern, more efforts are needed to accelerate its formation. Hong Kong should swiftly establish an effective anti-epidemic mechanism and resume normal exchanges with the mainland.
The term “domestic circulation as the mainstay” refers to the need for bottom-line thinking and preparedness for the “new Cold War” waged by the United States against China. China must be able to sustain itself and maintain its regular economic activities and social life under extreme conditions. The key to achieving this goal is that China’s 1.4 billion people, including Hong Kong residents, must be self-sufficient in their daily necessities. Concurrently, the domestic industrial and supply chains must be able to maintain their own circulation if and when their connection to the outside world is cut off. With this new development goal set, Hong Kong must not only resume normal personnel exchanges with the mainland but also speed up the Guangdong-Hong Kong-Macao Greater Bay Area development and integrate its own development into the nation’s overall development strategy.
It should be noted that Hong Kong’s role and functions in the first 40 years of the nation’s reform and opening-up drive both benefited and gained from its close ties with Western countries because in those years, the nation’s reform and opening-up drive was focused mainly on learning from and digesting the Western market-economy mechanism and experience.
Now that the country is in a new stage of developing socialism with Chinese characteristics, the focus has been shifted to building a new development pattern and deeper reform to enhance the achievements of the previous 40 years, starting next year. The primary challenge will be US attempts to decouple from China by gathering other Western countries together to form an anti-China alliance. As such, Hong Kong will find itself no longer able to benefit and gain from its close ties with the Western world as it used to. Moreover, it will have to make some really difficult choices sooner rather than later.
The special administrative region government earlier gave a clear and firm response to US sanctions imposed on the Hong Kong chief executive and other key officials. As Washington continues to launch initiatives to contain China, including the HKSAR, the relationship between Hong Kong and the US will grow distant gradually.
London has no choice but to follow Washington’s lead when it comes to dealing with China. That is why British Prime Minister Boris Johnson referred to China as a “potential enemy state” when he explained his decision to exclude Huawei from the United Kingdom’s 5G network development. Even though the other four members of the intelligence-sharing alliance known as the “Five Eyes” are not completely subservient to the US, their toughness toward China is surpassed only by the US. As for Japan, the country will decide whether to join the “Five Eyes” after a new prime minister takes office. Yang Jiechi and Wang Yi, both top officials in charge of foreign affairs, didn’t put the UK or Japan on their itineraries during their recent trips to several Asian and European nations, in a way indicating that China will be selective in choosing partners in its opening-up strategy in the near future. Hong Kong must synchronize its relations with foreign entities with the pace and pattern of the nation’s development.
The Belt and Road Initiative will play an important role in the “international circulation” (foreign markets) of China’s new development pattern. The complementary nature of the “dual circulation” development pattern will be mainly seen in the BRI and the domestic market complementing each other. In the next 30 years, China’s friends will be those that support the BRI, who will naturally be Hong Kong’s main overseas trade partners.
The deepening reforms required to create the new development pattern differ from the reforms in the previous 40 years in two ways. First, they highlight the socialist characteristics of China’s market economy, which is to narrow the wealth gap between the rich and poor and restore the status of housing, healthcare, education and so on as public goods and services. While resolving poverty and building a relatively well-off society on the mainland, the central government emphasizes that not a single ethnic group or citizen should be left out. Similarly, in the battle against the COVID-19 pandemic, the central government bears all the medical expenses of every patient on the mainland.
The second difference is the combination of deepening system reform and the creation of an integrated regional economy. Not long ago, President Xi, while presiding over a symposium in Hefei, provincial capital of Anhui, on concrete steps to advance the integrated development of the Yangtze River Delta region, stressed that its development should focus on “integration” and “high quality” to ensure the efforts will be fruitful every step of the way.
As for Hong Kong, it has to find out where its capitalist system is inadequate. In the past, its obsession with free-market principles led to a severe shortage of public housing, public hospital beds, and places in local institutions of higher learning, while private-housing prices remained out of reach of average consumers. With the last factor in mind, Hong Kong must do its best not to be marginalized in Bay Area development.
The author is a senior research fellow of China Everbright Holdings.
The views do not necessarily reflect those of China Daily.
