Now, more than ever, doing business with China presents uncertainty. This uncertainty is not limited to China alone. How relations between the West and China will evolve is also unclear. Michael Green and Scott Kennedy of CSIS, a Washington, DC, think tank, observe that “global companies that have thrived on doing business with China are not well prepared to adapt to this new normal or to try and stem the tide”. When talking with companies, Green says that he found “an unexpected combination of overconfidence and resignation in their views”. In fact, this may not be so unexpected. Uncertainty evokes an emotional response as often as a push for rational analysis. “Common wisdom from the psychologist's perspective is that people do not like uncertainty, especially about the future, and that it generates a negative response.” Psychologists call this “ambiguity aversion”. Faced with uncertainty, some multinationals understandably take a “wait and see” approach to investment in their China business. For the largest investments, this makes sense in the depths of Covid-19 lockdowns. But uncertainty is not going away, and companies need to decide in order to succeed.

The track record of experts in predicting China's future is not good. “China cannot grow into an industrial giant in the 21st century. Its population is too large and its gross domestic product too small.” So wrote Bruce Nelan in an October 1992 edition of Time magazine under the title “How the world will look in 50 years”. Twenty years later the situation had already changed, with China serving as the “factory of the world”, providing multinational companies with low-cost manufactured goods. In 2014 distinguished Harvard professors Regina Abrami, William Kirby and Warren McFarlan could still pen an article with the title “Why China can't innovate”. Many still asserted that “China [was] largely a land of rule-bound rote learners” that could only imitate, not innovate. The argument was based largely on an assumption that those working within the constraints of an authoritarian regime could not innovate. Eight years later China was producing technology innovations across a range of industries and is likely to move ahead in others before too long.

This chapter opens the third part of the book in which a new theoretical account called collective equality is offered. At the core of collective equality, we find a recognition of the centrality of collectives and their equal relations as the primary pillar of justice and peace. Deeply divided places riven by ethno-national conflicts are characterized not only by national divide, but most often by practices of discrimination, political exclusion, and domination of one ethno-national group over the other(s). While the national divide itself is unlikely to disappear in such places, the way in which the ethno-national “border” is managed, or in other words how the groups and their members relate and interact, can dramatically change. Alongside liberal multiculturalism and liberal nationalism, collective equality introduces the paradigm of equality between the national groups that occupy a specific territory. In the realities of conflict-riven places, this new paradigm must respond to concerns that lay at the root of contemporary conflicts – the objection to or fear of foreign domination – common to both national minorities and national majorities caught in an “intimate conflict.”

This 2022 Financial Times article laid bare the decline of VW's China success story. VW had led the way in localization, with a 1984 joint venture and the launch in 1999 of a long-wheelbase model targeting the needs of the Chinese market. Now, with China's automotive market both the largest and most innovative in the world, the Localizer needed to localize more. As Herbert Diess, CEO, announced in Beijing following the first fall in car sales for 20 years, “The future of the Volkswagen Group will be decided in the Chinese market.” A taste of things to come in China's Dual Circulation economy?

Dual Circulation changes what foreign companies need to do. It both describes the context for business strategies that involve China and reshapes these strategies. First, the clear dividing line marked out between internal and external circulation highlights the divergent and distinct business environments between China and other markets. The much-discussed need to localize and adapt to the China context is stronger than ever. Second, the ambitions of Dual Circulation to create a technologically more capable and self-reliant China with a much larger consuming middle class change the nature of the China opportunity. In the near term, these ambitions sharpen China's policy focus on how foreign companies can help China succeed, especially in key technologies. This presents business opportunities, yet often runs counter to the China policy of governments back at headquarters. Moreover, the very aim of Dual Circulation is often to strengthen the future competitors of multinationals. In the longer term, Chinese policy success would create a much larger market, albeit one with much more capable Chinese competitors. Such success is far from a foregone conclu-sion, however. State intervention in technology initiatives and repeated government failure to address China's sectoral imbalances could instead lead to wasted investment, stagnant growth and a withering of entrepreneurial dynamism.