The Impact of Domestic Circulation on Value Chain Upgrading in China’s Equipment Manufacturing Industry: Evidence Under the Dual Circulation Strategy
1. School of Economics and Management, Chongqing Vocational and Technical University of Mechatronics, Chongqing 402760, China
2. Academy of International and Regional Studies, Sichuan International Study University, Chongqing 400031, China
| Abstract: | Since the reform and opening-up, China relied on its abundant resource endowment and advantages in cheap labor to deeply participate in the global production division led by developed countries, promoting the rapid expansion of the equipment manufacturing industry. However, participating in global production division of labor in this way has locked China's equipment manufacturing industry in the low-end link of the global value chain. How to break through the low-end lock in the value chain and accelerate the transition to the mid and high end is a key issue that urgently needs to be addressed for China's equipment manufacturing industry to achieve high-quality development. Against the backdrop of unprecedented changes in a century, China put forward a new development pattern of "domestic circulation as the mainstay, and domestic and international dual circulation promoting each other" based on the situation. By stimulating domestic demand, new impetus has been injected into promoting high-quality development of the Chinese economy. Based on this, this paper investigates how domestic circulation influences value chain upgrading in the equipment manufacturing industry. From a value-added decomposition perspective, the study constructs indicators to measure domestic circulation, domestic and international value chains, and overall value chain status. Using inter-provincial input-output data, the empirical analysis finds that domestic circulation significantly enhances domestic value chain upgrading but hinders the upgrading of international and overall value chains. Robustness checks, including variable substitutions and instrumental variable methods, confirm the reliability of these findings. The results suggest that to achieve comprehensive value chain upgrading, enterprises should strengthen their domestic advantages while integrating into global networks. Policymakers should prioritize innovation, balance domestic and international development, and ensure smooth international circulation. This study offers theoretical insights and practical policy implications for enhancing China’s equipment manufacturing value chain. |
| Keywords: | Dual Circulation; Domestic Circulation; Equipment Manufacturing Industry; Value Chain Upgrading |
| DOI: | 10.57237/j.wjeb.2025.02.003 |
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Received: 10 September 2025
Accepted: 5 October 2025
Published Online: 27 October 2025
Funding
| 1. | 重庆市教育委员会科技项目: 数字技术赋能重庆装备制造业价值链升级路径研究 (KJQN202303701) |
| 2. | 重庆市教育委员会人文社会科学项目: 数字经济赋能重庆装备制造业转型升级路径研究 (23SKGH209) |
| 3. | 重庆财经职业学院科研项目: “双碳”目标下绿色金融赋能重庆制造业绿色低碳转型的机制与路径研究 (2025KYZ017) |
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