International Supply Shock And The Construction Of New Development Pattern

The external environment of China’s economic development is full of instability and uncertainty due to Covid-19,superpower games and the counter-globalization.Based on the domestic and international situation,the Central Party Committee proposed to build a new development pattern.This strategy is both an important strategic deployment as China enters a new stage of development and a proactive behavior to integrate the two major issues of development and security.Marxist economic theory states that the essence of maintaining a well-functioning circular economy is to guarantee social reproduction.However,the fundamental contradictions of the capitalist mode of production result in a cyclical economy within the capitalist economy.When a cyclical economy bottoms out,there is a breakpoint in the production of intermediates within the capitalist economy.And then the supply of international intermediates is interrupted and the domestic sector using the relevant intermediates cannot complete the value accretion,resulting in a blockage point in the domestic circular economy.In 2020,China’s gross domestic product(GDP)accounted for nearly 17.4%of the world.This means that China is a pivotal economic power.The economies of Great Power are influenced by international economic factors,which in turn react to the international economy due to their strong power.In particular,since its accession to the World Trade Organization,China is highly embedded in the international intermediates trade network,deepening the linkage between the Chinese economy and the world economy.Therefore,the disruption of China’s domestic circular economy caused by international supply shock will further feed back to the international circular economy.In the long run,international supply shocks will have a negative cumulative effect on the domestic and international circular economy.Thus,we must pay great attention to international supply shock.This paper explores the mechanism of the impact of international supply shock on domestic development and international empowerment factors.First,the impact of international supply shock on domestic development is explored.The production sector is both a source of supply and demand for material materials.In the domestic circular economy,enterprises in the production sector constitute the nodes in the economic cycle network.Their production and survival are important windows reflecting the development of the domestic circular economy.When the production of enterprises is slowed down,the domestic circular economy would be blocked;when the survival of enterprises is terminated,the domestic circular economy would be broken.Therefore,this paper will argue the impact of international supply shock on the development of the domestic circular economy from two perspectives:production and survival of Chinese industrial enterprises.Second,we explore the impact of international supply shock on the empowerment factors of the international circular economy.Considering Foreign direct investment(FDI)and export trade are the core elements of the international circular economy empowering the domestic circular economy,this paper explores the impact of international supply shock on the international empowerment factors from the perspective of FDI and export.Finally,the coping mechanism of international supply shock will be explored.The demand side emphasizes cultivating domestic market demand,the supply side focuses on improving domestic supply chain capacity,and the supply-demand connection process pays attention to promoting domestic market integration.Thus,this paper explores the coping mechanism of international supply shock from three dimensions:domestic market demand,supply capacity of domestic supply chain and domestic market integration.This paper has eight chapters in total.Chapter 1 is the introduction.Chapter 2 is the literature review.Chapter 3 is the definition,measurement and characteristic facts of core concepts.Chapter 4 is the study of the impact of international supply shock on domestic circular development.Chapters 5 and 6 explore the impact of international supply shock on international empowerment factors from the perspective of FDI and export respectively.Chapter 7 is the coping mechanism of international supply shock.Chapter 8 is the conclusion and policy enlightenment.The main findings of this study are as follows.Firstly,since the global financial crisis in 2008,the growth rate of international intermediates maintains zero or even negative.At the same time,China has located in the core of the international intermediates network.Under the supply fluctuation of international intermediates,the international supply shock faced by Chinese enterprises continues to rise.Second,international supply shock significantly inhibits the development of the domestic circular economy.This is reflected in two aspects:on the one hand,international supply shock reduces the scale of production of domestic circular economy.Besides,international supply shock also has a dampening effect on the scale of exchange and smoothness of exchange in the domestic circular economy.On the other hand,international supply shocks raise the market exit risk of domestic firms.Thirdly,international supply shock significantly inhibits the development of international empowerment factors.FDI and export are the core elements of the international circular economy that empower the domestic circular economy.From the perspective of FDI,international supply shock significantly inhibits the addition of foreign capital and exacerbate the withdrawal of foreign capital.Because foreign capital is deeply embedded in the Chinese economy,the impact of international supply shock on foreign investors in China leads to spillover effects on other domestic enterprises through input-output linkages and joint venture linkages.From the perspective of export,international supply shock significantly depresses the export scale of firms.An extended Cox proportional risk model is further constructed to confirm that international supply shock contributes to the exiting of export markets of domestic firms.Fourth,cultivating domestic market demand,enhancing the supply capacity of intermediates,and promoting the integration of the domestic market are effective paths to deal with international supply shock.First,with the increase of domestic market demand,the impact of international supply shock on the domestic circular economy tends to weaken.However,the unbalanced regional development and irrational industrial structure of the domestic demand market will exacerbate the negative impact of international supply chain shock.Second,under the technology level gap,the domestic supply capacity of intermediates is expressed as the innovation level of the domestic upstream industry.Therefore,improving the innovation level of the domestic industry can help cope with international supply shock.Third,promoting the integration of domestic markets helps to cope with international supply shock.Finally,domestic market segmentation is an important reason for the lack of domestic innovation.Promoting the domestic market integration can improve the domestic supply capacity of intermediates.