CAN A NEW INFRASTRUCTURE PLAN REALLY PROMOTE THE DUAL CIRCULATION STRATEGY IN CHINA?

Ying Wang (), Wenjie Pan, Wanhao Dong and Kao-Jen Lin ()
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Ying Wang: Institute of World Economy, Shanghai Academy of Social Sciences, P. R. China
Wenjie Pan: ��School of Economics, Xiamen University, P. R. China‡Institute of Financial Studies, Xining University, P. R. China
Wanhao Dong: �School of Public Finance and Administration, Shanghai Lixin University of Accounting and Finance, P. R. China
Kao-Jen Lin: �College of Business, Chung Yuan Christian University, ROC

The Singapore Economic Review (SER), 2024, vol. 69, issue 01, 61-79

Abstract: This study aims to provide an answer to the question: “Can a new infrastructure plan promote the Dual Circulation Strategy in China?†Using provincial-level panel data for 31 provinces from 2005 to 2020, this study estimates a five-variant panel vector autoregressive model for the national level, eastern region, central region and western region, respectively, and conducts panel Granger-causality tests and impulse response analysis. The primary finding of this study is that there is a bi-directional Granger-causal relationship between the growth rate of new infrastructure investment and each of two variables representing internal circulation and each of two variables representing external circulation at the national level. According to the impulse response analysis, all variables representing either internal or external circulation have a positive impulse response to an increase in the growth rate of new infrastructure investment, except for trade openness. This study thus confirms that the new infrastructure investment can promote the Dual Circulation Strategy that has been a new guide for China as it moves toward a high-quality economic development stage.

Keywords: China; dual circulation strategy; new infrastructure; panel vector autoregressive model; panel Granger-causality (search for similar items in EconPapers)
JEL-codes: C23 E11 E12 E61 O18 O25 O33 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S0217590823500042

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