Xi Jinping Turns China Into 'Fortress Economy' To Withstand External Shocks: Report

In a strategic pivot designed to safeguard China’s economic stability amid escalating global uncertainties, Chinese Communist Party (CCP) leader Xi Jinping is advancing an economic model aimed at bolstering national self-sufficiency and resilience. This shift, documented in a recent study, underscores Beijing's ambition to fortify its economy against external shocks, including geopolitical conflicts and global pandemics.

The report, released on July 30 by Jimmy Goodrich, a fellow at the University of California Institute on Global Conflict and Cooperation, delves into official CCP speeches and policy documents. It provides an in-depth analysis of the Party’s progress in implementing its “fortress economy” policy across several critical sectors.

“[The strategy is] designed to bolster national self-sufficiency and resilience against external shocks, and ultimately allow the nation to withstand ‘extreme situations’ including protracted armed conflict,” the paper asserts.

The impetus for this strategic shift can be traced to a series of global upheavals. Rising tensions between the U.S. and China, the Russian invasion of Ukraine, and the far-reaching disruptions caused by the COVID-19 pandemic have collectively underscored the vulnerability of interconnected global supply chains. These events have prompted Beijing to recalibrate its economic priorities, focusing on reducing dependency on foreign markets and enhancing domestic economic capabilities.

Central to this recalibration is the concept of “dual-economic circulation,” a policy aimed at reorienting China’s economy from its historical reliance on exports towards a more balanced model that strengthens domestic industries while continuing to engage in international trade. By fostering robust internal economic activity, the CCP hopes to mitigate the impact of global disruptions on China's economy.

This dual approach not only seeks economic stability but also dovetails with Xi’s broader national security agenda. The report highlights that the CCP’s strategy encompasses several critical areas, including food and energy security, supply-chain robustness, civil defense mobilization, and the development of strategic reserve infrastructure. These measures are designed to prepare the nation for “extreme-case” scenarios, ensuring that China remains resilient in the face of potential crises.

As the Epoch Times notes further, “This research contributes to understanding China’s strategic intentions and provides a foundation for further exploration of the implications of China’s fortress economy on global economic and geopolitical dynamics,” the author wrote.

China’s economy significantly depends on exports. Last year, the country’s total exports reached about $3.38 trillion, while imports totaled roughly $2.56 trillion. This resulted in a trade surplus of $820 billion—the second-highest in the past decade.

Robert O'Brien, a former national security adviser, commented on the report on X, formerly known as Twitter, urging Washington to pay attention.

“The CCP is preparing to fight and win (or at least survive) a very long war. America should take heed,” he wrote on Aug. 3.

Since the COVID-19 pandemic, the Chinese economy has faced multiple problems, particularly the property crisis marked by the bankruptcy of China’s real estate giant Evergrande. The company is the world’s most indebted firm, with $340 billion in debt.

Earlier this year, a prominent hedge fund manager said the Chinese economy was in trouble because of its heavy investment in the real estate sector, which could result in a crash worse than the 2008 U.S. financial crisis.

The property sector accounts for 70 percent of China’s gross household wealth and about 25 percent of its gross domestic product (GDP), making it a key growth driver but posing a vulnerability for its economy.

China’s troubled real estate market has dragged down the economy, prompting the regime in Beijing to implement “temporary steps,” including 16 measures to support the sector, according to last year’s report from the Atlantic Council GeoEconomics Center and the Rhodium Group, a Washington-based think tank.

The report found that China’s economy struggled with multiple problems, and without robust reforms, Beijing was likely to face a threat to its growth prospects in the coming years, hurting its global position.

The report points out that the root of China’s economy is its “persistent structural reform gap,” which results in “lagging behind top OECD economies in most market dimensions,” and suggests that structured reform is needed.

“The Chinese economy is suffering in part because the [Chinese Communist] Party continues to prioritize ideology over economic dynamism,” it reads.

Due to its weak performance, Beijing’s ambition to dethrone the United States as the world’s largest economy by the end of the 2020s “will not happen in this century, let alone this decade,” the report notes.

Bloomberg economists also forecasted last year that China’s economy was unlikely to overtake the U.S. economy. They predicted that China’s GDP might surpass that of the United States around the mid-2040s but by “only a small margin” before “falling back behind.”