The ‘Dual Circulation’ development model of China: Background and insights

Abstract

Purpose – Global supply chains experienced unprecedented changes in 2020 and the relationship between domestic and global markets needed adjustments considering the long-term impacts of the changes that are unfolding around these markets. China has become the first country to announce a formal strategy – “Dual Circulation” Strategy (DCS) – to guide its self-reliant economic development in the post-COVID era. However, what exactly is the DCS and what drove China to publicize this strategy is not yet clear. This study aims to answer these questions. Design/methodology/approach – Based on an extensive review of literature and media reports, a background has been constructed that justifies the DCS as a long-overdue historic necessity. Findings – A novel definition of “Dual Circulation” is introduced. A novel construct to visualize the domestic circulation in light of international and domestic markets and international circulation has been presented. The study argues that maintaining optimum levels of consumption and saving rates is crucial to the DCS’s success. Originality/value – The study pioneers the first scientific definition of the “Dual Circulation” that will pave way for future debate on the topic. Also, it is the first time an academic study on the DCS has been executed.

Keywords

• Dual circulation
• Economics
• Consumption
• Sustainable development
• China