数字经济助力形成双循环发展新格局 - 2020-10-22

Accelerating the establishment of a "dual circulation" development pattern with domestic cycle as the mainstay and with domestic and international development reinforcing each other further identifies the direction for China to respond to changes in domestic and overseas economic situations and promote the long-term and sound economic development.
In the short and medium terms, China will be affected by regular epidemic prevention & control and ongoing spread & resurgence of the pandemic. In the long term, China will face increased uncertainty of international political and economic situations externally, but strong growth force internally because of in-depth reform of economic system in China. Accelerating the establishment of a "dual circulation" development pattern is not only an important measure for China to accommodate to the current domestic and international economic and political situations, but also the internal requirements for the supply-side structural reform strategy of China.
Digital economy has made outstanding performance in recent years. Relevant data indicates that the value added created by China's digital economy made up 36.2% of China's GDP and had a contribution rate of 67.7% to GDP growth in 2019, and digital economy has particularly made considerable contribution to effective prevention and control of COVID-19 since this year. The development of digital economy and its efficacy prove that digital economy can become an important means to drive the economic "dual circulation" development pattern of China.
Consumption demand involves intangible consumption services and tangible products. Concerning intangible consumption services, digital economy makes some traditional non-tradable services become tradable, thus realizing the cycle in a bigger space, e.g., telemedicine, distance education, remote cultural and tourism consumption, etc. In the times when digital economy is undeveloped, these traditional services had to be rendered to the consumers only in a face-to-face manner, thus having limited audiences. Besides, these service industries were hard to leverage the scale effect and optimize the resource allocation to a greater extent, and they had to follow the rules of local circulation and were unable to realize a big circulation domestically and internationally because of being subject to the rules of local circulation, resulting in slow productivity, but high unit production cost and consumption price. Digital economy technically changes such situation. Specially, relying on the new-generation information and communications technology, augmented reality technology and other technologies, excellent education resources or medical resources of a certain specialty or link nationwide, even worldwide, can be available to consumers across China or the globe. Visitors may pay an online visit to museums and scenic resorts thousands of miles away through digital technology, virtual reality technologies, etc. Overcoming time and space limitations, the services are made accessible to more consumers, thereby exerting the advantages of economies of scale, reducing the unit cost, and creating more social welfare. In addition, digital trading of tangible products involves a process of digitalizing the trading means and the integration of online platform and offline stores. Thanks to digital transformation of trading, consumers can, at anytime and anywhere, select and purchase the goods around the world through the mobile terminals, and both demanders and suppliers can realize the cross-regional flow through online exhibition show, negotiation, transactions, assessment, payment and other means, and produce the market competition effect to a greater extent, thereby driving more efficient division of labor in society and realizing the optimal allocation of resources in the sector of tangible products.
(By Xia Jiechang and Tan Hongbo from National Academy of Economic Strategy, CASS)