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Web of Proceedings - Francis Academic Press
Web of Proceedings - Francis Academic Press

Study of Shandong Province's 'Dual Circulation' Economy Based on the GTAP Model

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DOI: 10.25236/ssehr.2023.014


Zhifan Liu, Xin Zhao, Ying Mou, Wanlei Xue, Lili Zhang

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Zhifan Liu


This paper combined qualitative and quantitative approach to investigating and measuring the quality of Shandong Province's "dual circulation" economy. Building on the qualitative analysis of the economic advantages and limitations of Shandong Province in constructing a new development pattern, a GTAP-DC-SD (GTAP - Dual Circulation - Shan Dong) model with Shandong provincial accounts is further constructed using the method of global value chain decomposition. The paper quantitatively analyzes the development level of various indicators of "dual circulation" in China and Shandong Province. The study finds that indicators of Shandong's "internal circulation" in the domestic cycle are at a relatively high level, but the development of internal circulation within the province is relatively weak. From the perspective of demand-driven economic indicators, China's investment still dominates, leaving some space for the growth of domestic consumption. At the industrial level, the internal demand indicators for Shandong’s labor-intensive industries and light and heavy industries are relatively weak. Based on these findings, this paper proposes a strategic path for Shandong Province to construct a high-quality development pattern of "dual circulation"—that is to cultivate a demand-driven economic cycle and build a strong linkage between internal and external circulations. On the supply side, structural reforms with emphasis on industrial innovation capabilities should be advanced; on the demand side, it suggests adjusting the structure of domestic demand to achieve a structural transformation driven by domestic demand. Meanwhile, the paper emphasizes the balance of regional economic development and sustainability, promoting the international circulation with higher-level open economy.


Dual circulation, domestic demand-driven, global value chain, regional economy