China changes its strategy after Covid-19; now development model will be based on domestic consumption instead of exports

Amid accusations and gritty of spreading the Covid-19 pandemic around the world, China has announced a change in its development model from next year. Chinese President Xi Jinping said on Thursday that the country is going to change the development model from next year. The new model will emphasize and rely on domestic consumption rather than export-oriented growth.

China’s export-oriented development model has helped make it the world’s second-largest economy after the US. Addressing Asia Pacific Economic Cooperation (APEC) CEO talks via video link, 67-year-old Xi Jinping said that from next year, China will embark on a new journey towards building a modern socialist country. He said that we will promote the path of new development, with emphasis on the domestic market. Domestic and international markets will serve as complementary to each other.

The President said that the redesign of development is a strategic decision. We made this decision based on China’s current and development status. This step is being taken keeping in view the economic globalization and changes in the external environment. At an important conference of the ruling Communist Party of China last month, Xi accepted proposals for the 14th Five-Year Plan (2021-2025) for national and social development and to achieve long-term goals by 2035.

The Fourteenth Five-Year Plan emphasizes extensive changes in the country’s domestic market to increase domestic demand. The aim is to reduce dependence on China’s dwindling export market. A long-term plan has been prepared in approach 2035. China was once considered the world’s factory. But with the decline in global markets and the trade war of US President Donald Trump, the ban on units such as China’s technology companies Huawei and Ticketock has changed.

Referring to the reasons for the change in the development model, Xi said that the dependence on foreign markets and resources is slowly changing. He said that the ratio of foreign trade to GDP (GDP) was 67 percent in 2006, which came down to 32 percent in 2019. At the same time, the surplus of the current account as a proportion of GDP was 9.9 percent in 2007, which has come down to one percent now.