What does China’s dual circulation policy mean?

The national five-year plan is the most important guide of policy direction for China’s short-term economic, political, cultural and social development.

Against a background of higher education enrolment surpassing 50% of the university age cohort in 2019 and a growing number of Chinese universities achieving world-class status as institutions or for certain disciplines, the 14th Five-Year Plan for 2021-25 and Economic Goals for 2035 (hereafter, the Plan) was reviewed and approved in the 19th Central Committee of the Chinese Communist Party in late October 2020.

It consists of two policy blueprints. One is the 14th Five-Year Plan (2021-25), which is the first five-year period in which China outlines its aims to become a broadly prosperous society. The other is the 2035 vision (2021-35), which creates a mid-term vision for how China can achieve ‘socialist modernisation’.

Although the final and full plan still has to be ratified by the National People’s Congress in March 2021, the guidelines and key points are unlikely to be changed. So, what, together, do these suggest?

General policy direction

Some existing policy directions continue to be important in the Plan, for example, safeguarding the Communist Party leadership is the precondition for accomplishing the goals and tasks laid out in the Plan.

Similarly, the Plan says that the socialist system should be adhered to and improved and can guarantee China’s future development. In addition, the Plan stresses the importance of advanced technology, basic research and indigenous innovation, with innovation in particular considered to be the most fundamental driver of China’s future development.

However, there are also some new strategies in the Plan. For example, despite intensified conflict between China and the United States and some other high-income Western countries, the strategy of so-called ‘dual circulation’ – domestic circulation (local production and consumption) and international circulation (the introduction, absorption and adaptation of foreign technology and attention to global markets) – is developed.

Domestically, China aims to enhance domestic innovation capabilities by undertaking basic and innovative research, promoting the commercialisation of research, the transfer of government patent rights to innovators, etc.

Internationally, it is primarily concerned with acquiring the most advanced technology from foreign countries by jointly producing high-quality researchers, conducting collaborative research with foreign countries and building overseas centres for basic research and using open technology and so forth.

In short, while the Plan aims to stimulate domestic demand, it also supports international export markets.

Guidelines for higher education development

The Plan also provides several guidelines about the future development of higher education in China. Firstly, the Plan calls for “sustained and healthy” growth marked by “significantly improved quality and efficiency” over the next five-year period. This can be contrasted with China’s emphasis on quantitative expansion since the late 1990s.

Another main focus is on improving the quality of China’s higher education, including its national academic excellence and global competitiveness.

For example, the Plan outlines the need to cultivate, attract and make good use of all the country’s academic talent in order to produce more world-class leaders in research and technology and teams with innovative capabilities and to ensure more of its young researchers in science and technology are globally competitive.

The Plan also outlines how the Chinese government will continue to support the universities listed in the ‘Double World-Class University’ programme in 2015 – which aims to develop elite Chinese universities and their individual faculty departments into world-class institutions by the end of 2050.

To do this, it will strengthen the production of its talent in basic research, widen its policies on academic talent and build research and innovation to attract more outstanding academics and students at home and abroad.

As suggested in the previous plans, the Plan repeatedly emphasises the cultivation and use of China’s soft power through various academic and cultural activities such as building a number of high-level universities and exporting Chinese culture and some of its educational programmes to the countries along the New Silk Road in particular.

Second, the Plan places a strong emphasis on technology and innovation, emphasises the role of innovation and indigenous technology in driving the modernisation of China by 2035 and calls for the urgent development of China’s technological base. It explicitly proposes that China will make “major breakthroughs in key core technologies” and become a global leader in innovation.

Third, while the project of China’s ‘Double World-Class University’ initiative will continue to be supported, the Plan also underlines the urgent need for professional personnel and talent in science, engineering, agriculture and medical science.

It is hoped that these higher education institutions which mainly provide practical and utilitarian programmes will vigorously cultivate technical talent, enable China to adapt to social changes and contribute to its economic growth and regional development.

It should also be noted that, despite no explicit suggestions, these institutions will also need to enhance the quality of their teaching and learning activities and strive to become globally first class by competing with peer institutions and across disciplines.

Finally, the Plan suggests that “the optimal allocation and resource sharing of scientific research in independent research institutes and academies, higher education institutions and enterprises should be facilitated… a deep collaboration between higher education institutions and industry promoted… and the country’s soft power boosted”.

Although this is not a totally new strategy, a higher priority is placed on collaboration and partnership between university and industry and the transfer of research outcomes from university to industry and innovators and it aims to boost China’s indigenous technology and innovation and decrease dependence on foreign technology.

The key guidelines relating to higher education in the next five years and beyond are not only domestically centred, but also globally orientated, similar to those for the country’s economic development.

Many details have not yet been provided about what specific areas China will devote to cutting-edge and breakthrough advancements in technology and to develop the country’s indigenous technology, and to what extent it will enhance its soft power as well as support the establishment of a permanent international coordinating body for global public goods in the near future.

But there is little doubt that the end goals of China’s higher education plan are not limited merely to expanding the size of its higher education provision, providing more higher education opportunities for students and contributing to economic growth.

It has developed much clearer and more ambitious goals to make qualitative improvements to its higher education system, especially to promote innovation in talent production and basic research and to become a global leader in research and development and some ‘core technology’.

Challenges ahead

Although some Chinese research universities have kept climbing the global university ranking tables since the early 2000s and the international standing of Chinese research universities is likely to be increased in the near future, China will face more challenges to make the kind of progress it envisages in some of its other goals outlined in the Plan.

First, compared to many Western countries like the US, the UK, Germany and even Japan and South Korea in East Asia, there is no long-standing tradition in China of undertaking partnerships and collaboration between university and industry, and collaborative research and development (R&D) activities between university and industry in China are more rare.

It is likely to take rather a long time for university and industry to work together and yield high-level and innovative outcomes that can help China become less dependent on foreign countries in some key areas.

Second, since there are no globally recognised technical and vocational university ranking systems like the Academic Ranking of World Universities by Shanghai Jiao Tong University, the Times Higher Education World University Rankings and the QS World University Rankings and the quality of teaching and learning activities is far more difficult to measure and rank across countries than research output, it is still unclear how individual Chinese technical and vocational education institutions might compare with those in other countries and become global first-rate institutions in technical and vocational education.

Finally, if relations between China and the US and other Western countries like the UK, Canada, Australia and some European Union countries become more strained, there is little doubt that international exchange and collaboration between China and these countries will be greatly reduced.

Further, more restrictive measures are likely to be imposed by these countries on China with regard to access to the most advanced or ‘sensitive’ technology, and collaboration in producing and training doctoral students and young researchers.

There are also concerns about the ability of top-level international researchers, especially in important and sensitive disciplines, to come and work in China, and help it to advance its basic research and technology and about China’s ability to undertake collaborative R&D activities with certain Western countries.

More importantly, unless a more favourable academic environment – such as one with more institutional autonomy and academic freedom, as well as more emphasis on research integrity – is created, it will be difficult for Chinese universities to develop the kind of high-level and innovative talent that has been produced by global first-rate universities like Harvard, MIT and Oxbridge by 2035.

Futao Huang is a professor at Hiroshima University, Japan, and co-investigator on the Centre for Global Higher Education’s global higher education engagement research programme at the University of Oxford, United Kingdom.