Lu Ming: This paper studies how China's Internal Circulation Strategy (ICS) affected investor behavior, which is measured by Baidu search index, and consequently, how it impacted the volatility of the Shanghai and Shenzhen stock markets. The major finding is that the ICS did lead to higher volatility of the stock markets. Although the finding is quite informative, I would like to provide some discussion, as follows.
First, I think we need to interpret ICS better. The authors, as many others in the international community, regard China's ICS as a signal of deglobalization. This should be carefully discussed. According to a paper presented at the Asian Economic Panel Meeting, Dublin, in May 2023, U.S.–China trade and U.S. foreign direct investment (FDI) to China have kept rising in recent years, even if there was a so-called trade war between these two countries. I am not doubting the cooling trend of the international...