The current era of de-globalization is characterized by the restructuring of global supply chains and the intensification of geopolitical conflicts. Major economies have increasingly tightened their borders and implemented inward-looking industrial policies. The global division of labor that has persisted for decades now faces unprecedented fragmentation and divergence, further exacerbating the fragility of a sluggish global economy. To effectively hedge against the high degree of uncertainty in the external environment and stabilize the foundations of domestic economic development, China has introduced the major strategic framework known as "Dual Circulations". The main objective of this policy is to coordinate domestic and international markets, balance development with security, and respond to the drastic shifts in the global economic landscape.

ANBOUND’s founder Kung Chan is of the opinion that the crux of the Dual Circulation strategy lies in "coordination" rather than a formalistic "dichotomy" between the internal and external sectors.

Looking at the original policy design, the "Dual Circulation" strategy seeks to balance the cultivation of the domestic market with international cooperation and openness. However, the inherent dualistic attributes of its form are easily exaggerated. This not only makes it difficult to achieve the core objective of "internal-external synergy and mutual reinforcement" but also, to a certain extent, exacerbates fluctuations in market expectations and deviations in policy execution. This situation is most evident in the strategy’s formal structure, which is predicated on an artificial division between "Internal Circulation" and "External Circulation". By forcibly imposing boundaries on an otherwise integrated global economic system, this framework implicitly suggests a hierarchy of importance and a sequence of priority. Evidently, such a formalistic "dichotomy" stands in relative opposition to the fundamental laws of economic operation, i.e., the underlying logic of global allocation and universal mobility in core factors of production, including goods, capital, technology, and talent.

It is precisely this conceptual division that leads to the positioning of domestic circulation as the mainstay, which in turn causes it to be easily misread in practice as an inward-looking orientation toward reducing external dependence and pursuing self-sufficiency across all industrial chains. Conversely, the stable expansion of the international cycle requires an undifferentiated market environment, a sustainable openness, and a predictable system of rules. These two parts see contradictions in their underlying logic that are difficult to reconcile, potentially leading to a policy dilemma where prioritizing one inevitably comes at the expense of the other.

As it stands, this binary framework invisibly imposes an "either-or" proposition upon market entities, local governments, and industrial sectors. It forces various economic entities of the country to prioritize and make trade-offs between domestic and international markets. This policy amplification effect that may lead to increasingly significant systemic deviations during policy implementation.

From the perspective of real-world economic data, the negative impacts of this orientation have already begun to surface. According to macro-economic data for 2024–2025 released by China’s Ministry of Commerce and the National Bureau of Statistics, actual utilized foreign direct investment (FDI) in China has faced downward pressure for two consecutive years. The growth rate of new foreign projects in the manufacturing sector has continued to slow, as some multinational corporations shift mid-range processing capacity to regions such as Southeast Asia and Mexico. In 2025, China's share of the global export market stood at approximately 14.1%, a retreat from the historical peak of 15.3% in 2021. Simultaneously, misinterpretations of the policy in certain regions have further triggered and exacerbated issues such as local protectionism, regional barriers, and cutthroat industrial competition. In 2025, the national industrial capacity utilization rate was 74.8%, falling below the internationally recognized reasonable range. In some sectors, the blind pursuit of the autonomous control of the entire chain and the issue of homogenized redundant construction have intensified, resulting in greater resource waste, increased inventories, and rising debt levels. The formal binary framework of Dual Circulation has gradually deviated from its original intent of coordinated and synergistic development, becoming a constraint that restricts high-level openness and undermines stable market expectations.

Kung Chan points out that it is necessary for China to return to its roots by advocating for the "Open Economy" strategy, a concept originally proposed by the country’s central leadership. His proposition, which diverges from the prevailing views in the Chinese academic and policy circles, is not a rejection of the Dual Circulation strategy. Rather, it emphasizes a return to the strategy's original intent, i.e., prioritizing the "coordination" of internal and external sectors while opposing a formalistic "dichotomy" between the two. The goal is neither to weaken the foundational role of the domestic market nor to unilaterally overemphasize the international market. Instead, the fundamental objective is to rectify excessive formalistic tendencies, unify policy direction, and stabilize global market expectations regarding China. Kung Chan believes that such a calibration is more aligned with the actual state of China’s economic operations, more consistent with the policy objective of building a unified national market, and better suited to the requirements of the global market and capital openness.

The key to the practical implementation of "Open Economy" lies in the degree of policy openness. Based on national security, industrial foundations, and the protection of livelihoods, every nation maintains a clearly defined, limited scope of non-open sectors. Furthermore, this degree of openness is flexible and dynamic, embodying the fundamental requirement of "coordination". The underlying logic remains the exchange of interests within the global market. Otherwise, containment will inevitably give way to openness, even for a protectionist administration like Trump's. In this regard, pursuing the concept of an "Open Economy" is actually more promising. It is, however, not easily achieved, requiring a comprehensive global strategic struggle characterized by wisdom and resilience. The ultimate outcome will likely see nations across the globe maintaining a model of "broad openness and limited protection", a form of finite openness where the real work and decisive effort are concentrated on calibrating the specific degree of policy transparency and access.

In practice, China has already exerted significant effort toward openness. The negative list for foreign investment access has been continuously shortened, with the manufacturing sector essentially achieving full openness. The 2025 edition of the Catalogue of Industries Encouraged for Foreign Investment, comprising a total of 1,679 items, further expands the scope of encouraged foreign investment, with a strategic focus on directing capital toward advanced manufacturing, modern services, and high-tech industries, as well as key regions such as the central and western provinces, the Northeast, and the Hainan Free Trade Port. In the financial sector, openness has steadily materialized. As of the end of 2025, the total assets of foreign banks in China reached RMB 4.2 trillion, while those of foreign insurance companies reached RMB 2.7 trillion. Furthermore, by 2025, Qualified Foreign Institutional Investors (QFII) were granted full access to trading across all bond categories, including treasury bonds, local government bonds, and financial bonds, as the level of facilitation for cross-border investment and financing continues to improve.

At the level of security and protection, China maintains necessary policy guidance and protection only in a very limited number of sectors, such as national defense, core strategic resources, and food and energy security. This scope of protection is narrow, with clear and transparent boundaries, making it fully align with the core characteristics of a finite open economy. For instance, in the semiconductor sector, while China has increased R&D investment to ensure supply chain security, it continues to import high-end chips and deepen international technical cooperation. In agriculture, the nation ensures a stable grain self-sufficiency rate of over 95%, while concurrently importing high-quality agricultural products to meet the diversified consumption demands of the domestic market.

China has effectively placed significant stakes on the "coordination" of internal and external sectors. In the future, the primary focus lies in adjusting concepts, orientations, and forms to better address the challenge of comprehensive policy coordination.

According to Kung Chan, for China, which has already identified "long-term stability" as its core developmental objective, the strategic positioning of an open economy is essential for stability to possess true strategic significance. However, genuine long-term stability can only be built upon a foundation of openness and an institutionalized order of openness, which serves to fortify the base of development; any stability derived from isolation is fragile and short-lived, serving only to exacerbate technological stagnation, industrial ossification, and market atrophy. Conversely, while openness entails intense competition, it creates the possibility for stable, sustainable, and resilient growth. Ultimately, this fosters a virtuous cycle where "openness drives reform, reform promotes stability, and stability safeguards openness".

In fact, amidst the tide of de-globalization, an open economy achieved through strengthened coordination serves as a "safe haven" strategy. A large-scale economy that remains committed to openness, adheres to rules, and maintains stability and control will naturally become a sanctuary for the flow of global factors such as capital, technology, and talent. Over time, it will evolve into a core hub within the global industrial chain layout, fostering a unique and formidable level of strategic competitiveness.

Kung Chan also points out that, judging from the historical laws of development, an "open economy" possesses inherent anti-cyclical resilience and the capacity for excess returns during the chaotic cycles of de-globalization. When the majority of global economies move toward closure, experiencing collapse, industrial contraction, and economic stagnation amidst crises, those economies that remain committed to openness and integration into the global market are uniquely positioned. They can absorb shifts in global demand, fill gaps in international supply, and capture the excess returns generated by cyclical dislocations, thereby achieving growth against the prevailing trend.

The case of Argentina during World War II serves as a classic historical example of an open economy thriving amidst global chaos. Following the full-scale outbreak of World War II in 1939, major European industrial powers were consumed by conflict, resulting in a total standstill of civilian production and severe shortages in basic consumer goods. Against this backdrop, Argentina maintained a position of neutrality and adhered to a policy of comprehensive trade openness. By refusing to take sides or erect trade barriers, the nation fully integrated itself into the global wartime supply-demand gap, ultimately reaping significant benefits. Between 1939 and 1945, Argentina consistently exported core commodities such as beef, wheat, and corn to a war-torn Britain. Export volumes to the United Kingdom more than tripled, with Argentine products accounting for 40% of Britain's total wartime agricultural imports. These sustained surpluses allowed Argentina to accumulate massive foreign exchange reserves. As Britain was unable to settle its accounts due to wartime fiscal deficits, a large-scale government debt was formed; by the end of the war, Argentina had emerged as one of Britain’s largest creditors.

Anti-cyclical strategic maneuvers under pressure not only facilitated wealth accumulation for Argentina but also drove domestic industrial upgrading. The share of industrial value-added in the national economy rose from 45% in 1939 to 52% by 1945, while the industrial workforce expanded rapidly from 690,000 to 1.03 million. During this period, Argentina's per capita national income surpassed that of traditional European powers such as Germany and France, placing it among the world's top high-income nations. Similarly, neutral countries like Sweden and Switzerland maintained economic stability through open trade networks during the same era. Ultimately, the decision to remain open does not depend on whether the world is in chaos, but rather on the ability to use institutional openness as an anchor to construct certain channels for returns amidst global uncertainty.

Historical experience has repeatedly proven that during cycles of global disorder and national contraction, closure inevitably leads to atrophy, while openness allows for the seizing of opportunities. True stability is not a static state achieved through isolation and self-preservation, but a dynamic stability embedded within the global system and fortified by risk-resilient capabilities. This is precisely the core strategic value of an open economy.

The dichotomous framework of "Dual Circulation" does possess certain formal disadvantages. The viable path forward lies in the holistic coordination and strategic mastery of both internal and external cycles. Consequently, China needs to return to its original intent by explicitly emphasizing and highlighting the concept of an "Open Economy". This represents both a continuation of the historical trajectory of reform and opening up, as well as a proactive response to the profound shifts in the current global landscape.

Of course, this constitutes an institutional shift that will involve highly complex issues like national policy, macroeconomics, industrial development, and foreign openness. Hence, this requires major strategic decisions and timely adjustments. The discussion here is intended merely to provide a directional exploration, a strategic concept, and a point of reference. Ultimately, only by remaining committed to openness, discarding confrontation, and integrating into the global community can China firmly grasp the initiative for development amidst the profound changes unseen in a century, where it utilizes openness to fortify the foundations of stability and to achieve sustained growth.

Final analysis conclusion:

In an era of deepening de-globalization, the dichotomous "Dual Circulation" strategy of China is prone to negative impacts. Consequently, China should return to its original intent and strengthen its sense of "coordination" to firmly establish an "Open Economy" strategy. In fact, the operational model of an "Open Economy" has long been successfully practiced in the country and repeatedly validated during periods of global chaos. Getting back to the essence of coordination, using institutional openness as an anchor and maintaining it diligently, would be crucial for it to construct a certain channel for policy returns amidst global uncertainty.