The Impact of Domestic Circulation on Value Chain Upgrading in China’s Equipment Manufacturing Industry: Evidence Under the Dual Circulation Strategy

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. 改革开放以来，中国依托丰裕资源禀赋和廉价劳动力等要素优势，深度参与了由发达国家主导的全球生产分工，推动装备制造业规模快速扩张。然而，以这种方式参与全球生产分工，使得中国装备制造业被锁定在全球价值链低端环节。如何破解价值链低端锁定，加速迈向中高端是中国装备制造业实现高质量发展亟待解决的关键议题。在面对百年未有之大变局的背景下，中国审时度势地提出“以国内大循环为主体，国内国际双循环相互促进”的新发展格局。通过激发内需动力为推动中国经济高质量发展注入了新的动力。基于此，本文在当前中国构建以国内循环为主体、国内国际双循环相互促进的新发展格局下，深入探讨国内循环对中国装备制造业价值链升级的影响机理，并基于增加值分解的角度，构建相应测算指标，测算国内循环水平、国内价值链水平、国际价值链水平和整体价值链水平，实证检验国内循环对装备制造业国内价值链升级、国际价值链升级和整体价值链升级的影响效应。研究结果表明：国内循环促进了中国装备制造业国内价值链升级，但不利于其国际价值链升级和整体价值链升级，经过一系列稳健性检验表明该研究结论是可靠的。该研究结论对于充分释放国内循环潜力，推进中国装备制造业价值链升级具有重要的政策启示。