Measurement and Empirical Research of Value Chain Upgrading Under Dual Circulation Strategy

The dual circulation strategy represents China’s new-era national development paradigm aimed at achieving sustainable economic growth while promoting global value chain (GVC) upgrading. This study develops an integrated analytical framework that combines a production–demand-based theoretical model with firm-level empirical analysis to examine how domestic and international circulation jointly influence value chain upgrading. Using multiple datasets, including the World Input–Output Database (WIOD), the China Industrial Enterprise Database, and the China Customs Database, the study provides empirical evidence on the mechanisms underlying GVC upgrading. The results show that within the domestic circulation framework, firms positioned further upstream in the value chain experience significantly slower upgrading, reflecting structural constraints such as limited domestic circulation depth and weaker feedback effects. The findings further indicate that dual circulation plays a critical role in overcoming these constraints. Improvements in domestic technological capabilities enhance firms’ competitiveness in global markets, facilitating their transition into higher value-added segments of GVCs. Domestic and international circulation thus operate in a mutually reinforcing manner. Overall, the study highlights the importance of strengthening domestic circulation while deepening international engagement to achieve sustainable and coordinated value chain upgrading.