Functional differentiation of chinese cities participating in the dual circulation: Chinese companies' global expansion perspective

The expansion of leading Chinese companies facilitates the circulation of production factors, and endows cities with the dual role of participating in the internal and external dual circulation. The dual circulation strategy implies that China should "rely on the internal circulation of domestic demand and innovation as the main driver of the economy, and balance emphases on both internationalization and self- sufficiency". In this context, recognizing the functional differentiation of cities participating in the dual circulation is of great significance. Drawing on the organizational network of Chinese companies in the Forbes Global 2000 and Fortune Global 500 list in 2018, this research applies the interlocking network model to map the domestic and international connectivities of Chinese cities. In doing so, it uncovers cities′ different roles in participating in the internal and external circulations, as well as their intermediary functions in the dual circulation. Based on their major business activities, we further divide companies into four sectors: Advanced producer service, consumer service, manufacturing, as well as mining and construction. This allows us to examine the sectoral differentiation of cities′ functions. We find that, administrative ranking and level of economic development have a significant impact on Chinese cities′ ability to participate in dual circulations. Our results also suggest hierarchical characteristics: National- level industrial centers have extensive global connections, and they are able to provide high-level products and services. Industrial centers at a regional level, by contrast, have stronger domestic connections, providing lower- level products and services to surrounding areas. Besides, different sectors shape various network structures and city functions. In the network shaped by advanced producer services, cities with high administrative rankings are able to participate the dual circulation; for the general service sector, the ability to participate in dual circulation is more affected by the level of economic development. By contrast, in the case of the manufacturing industry, a larger number of cities are involved in the dual circulation process, with a more scattered spatial distribution; in terms of the mining and construction industries, cities with resource advantages can widely participate in the dual circulation.