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US-China trade

Will multinational corporations survive China’s Dual Circulation Strategy?


Published 14 December 2021

Dual Circulation policy, with its goals of higher quality growth, economic equality, and self-reliance, poses a challenge to multinational companies (MNCs) operating in China. It would be in the country’s best interest to widen the opportunities for foreign firms; in addition to having positive economic impact, MNCs represent the strongest constituency to promote China's interest abroad.

Multinational corporations (MNCs) have long played a major role in formulating foreign policy towards China. More recently, American MNCs played a significant part in promoting trade relations with China and paving the way for the country’s accession to the World Trade Organization (WTO) in 2001.

It is therefore no surprise that as Beijing’s assertiveness prompts a global debate about how to handle President Xi Jinping’s proposal for ‘national rejuvenation’, MNCs operating in China find themselves at the center of this discourse. The future of multinational corporations operating in China, particularly as it embarks on the new Dual Circulation Strategy (DCS), is the subject of this three-part paper by Hinrich Foundation Research Fellow Stewart Paterson.

Section I assesses the importance of MNCs to China, and China’s importance to MNCs. We examine the evolution of MNC activity in China – its scale, scope, and profitability. In Section II, by using publicly available company data, the paper scrutinizes varying types of MNC activity in China. Finally, Section III positions MNC engagement with China in the context of DCS and examines the changing attitudes and the political role the firms play in influencing policy formulation.

This paper is the third of a five-part series on China's Dual Circulation Strategy authored by Stewart Paterson. Download the first two studies here:

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Author

Stewart Paterson

Stewart Paterson is a Research Fellow at the Hinrich Foundation who spent 25 years in capital markets as an equity researcher, strategist and fund manager, working for Credit Suisse, CLSA and most recently, as a Partner and Portfolio Manager of Tiburon Partners LLP.

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