Dual Circulation: A Strategic and Economic Angle

Jack M. Lindstrom

16 June 2026

The role of dual circulation strategy (双循环) in Chinese economic policy has been viewed thus far as the anchors that simply strengthen and protect the internal economic system. These anchors create stability; however, they may serve more as a shield than an anchor, as insulation from foreign leverage than pure internal stabilization. It is this threshold, wherein the Chinese civil-military fusion (军民融合) doctrine intersects with economic policy and empowers China not through economic stability but instead through strategic removal of and protection from chokepoints. The origins of dual circulation, in May 2020, served as a pandemic-era economic establishment, a policy reacting to the COVID disruption and rising U.S. trade pressure. As such, major Western institutions understand this policy through a macroeconomic lens. This analysis serves a different purpose, as it believes such understandings and the present literature are incomplete on account of the potential dual circulation that plays as a geopolitical sword and shield, one which mirrors China's already established civil-military fusion. The present literature is not incorrect in its analysis of dual circulation in terms of macroeconomic function; however, it needs to be connected with the civil-military fusion to properly understand all angles it serves.

The fundamental role this dual circulation carries can be observed in the 2020 Politburo Standing Committee meeting, wherein the statement regarding dual circulation's exigence is officially stated, “deepen supply-side structural reform, fully leverage our super-large market advantage and domestic demand potential, and build a new development pattern in which domestic and international circulations mutually promote each other.” The cornerstone of this purpose is named as “supply-side structural reform” (供给侧结构性改革), which displays the first peak of potential civil-military fusion. Xi's framework is set on indigenizing production capacity in strategic sectors—that is, strategic translation of the vague “supply-side structural reform”; what that means, however, is an orientation surpassing simple economic change. This is reflected in the ideological etymology of the wording, 双循环 carries Marxist undertones, and provides the link between strategy and Marxist theories of social reproduction and internal circulation of capital. This framing is not, therefore, merely economic, but entwined with the state as a whole, not market efficiency. Structural reform of the internal supply capabilities of China's economy posits the notion that China's modern orientation is not merely economic reform but also plays a role in grand strategy. What serves the state is not market reform, but civil-military fusion; a weaponization within the markets and an insulation from foreign chokepoints.

This insulation from international leverage is the emphasis on self-reliance in critical technologies; this is mirrored throughout the world in terms of both risk and strategy. The United States does not export the manufacturing of weaponry, for example; however, the outsourcing of microchips has led to great fear of losing that very technology or production ability, thus becoming technologically handicapped. It is these kinds of chokepoints China is working through the dual circulation to eliminate; the strategy is to prioritize assets, while removing liabilities. The technologies with such an emphasis for dual circulation are those of semiconductors, AI, and advanced manufacturing. It is these technologies which are directly incorporated as part of China's civil-military fusion (军民融合) agenda. This has been perceived as a macroeconomic strategy to replace imports to bolster domestic growth, it is instead a substitution serving to eliminate chokepoints the U.S. demonstrated it could leverage through the FDPRs on Huawei, as well as sanctions and export controls. The modern United States prefers to utilize less violent, risky maneuvers such as wars, particularly in the age of nuclear powers, and instead depends on its economic arsenal; it is this underbelly that China is fortifying and thereby reducing American leverage. As Cheung writes, the techno-security state depends upon economic instruments for security ends. It is this leverage which is being removed, and, given American dependence upon Chinese mineral processing, potentially reversed. It was only the result of American credibility that American sanctions, FDPRs, and restrictions on trade did not lead to the perception of the United States as a reckless financial pilot of the world economy. As such, weaponization of the economy, foreign exchange system, banking systems, and supply chains did not derail the world economy or shift it elsewhere. This may occur, however, should China weaponize its own supply chains now. In the long term, this changes. Should China successfully insulate itself and remove these chokepoints, it would suffer no great harm by weaponizing its supply chain against the U.S., so long as it kept positive ties with other major trading nations.

The prominence of this insulation is reiterated by the 14th Five-Year Plan, which dedicated a full chapter to dual circulation with a primary focus on internal, rather than external, circulation. Self-reliance, therefore, is a significant objective, not simply an economic plan established to mitigate the financial pains of COVID. Building domestic consumption establishes more than state-controlled growth; instead, it reduces the economic leverage that trade dependency provides foreign adversaries. A China independent of the export markets is a China that cannot fall victim to financial coercion. In other words, it is deterrence economics. The external circulation component is perceived the same way China's joining the WTO was perceived; a commitment to globalization. However, controlling external engagement by selectively maintaining trade relationships while also promoting domestic redundancy is the same dual-use posture. China reaps the benefits of technology, capital, and market access from the international system while eliminating its own vulnerability to that system. This is not and cannot be perceived as an openness to the world but instead as what it is: strategic asymmetry, following the same playbook of the ascension to the WTO.

Dual circulation is not a sudden advancement in the armies of Chinese strategy; instead, it is the natural progression of Xi's security strategy. Made in China 2025 (中国制造2025), the military-civil fusion strategy, as well as Xi's consistent framing since 2014 of national security through economic security. The Belt and Road Initiative and Made in China 2025, before dual circulation, functioned at first as a policy buzzword, but when falling from Xi's mouth, solidifies into a broader strategic direction, which was implemented into action across the party apparatus. The pattern is echoed throughout, Beijing announces an economic initiative while Western analysts debate its economic merits, and its secondary purpose is a security architecture which goes glossed over for the economic considerations.

The implications of this Chinese policy and its enactments change Western policy implications correspondingly. If this policy of dual circulation is tied as closely to the military-economic doctrine as it seems to be, rather than an economic policy, evaluating it upon domestic economic success is faulty. Regardless of a boost in domestic consumption, and therefore “failed”, dual circulation will still succeed in indigenizing semiconductor production as well as reducing financial exposure to U.S. sanctions and FDPRs. As such, it can fail in economic theory but succeed in geopolitical stratagem. The original liberal belief of China's ascension to the WTO was that it would inspire more Western, liberal, democratic principles within China; instead, it simply enabled the nation to utilize international benefits without shifting. This would be another step in the same practice, economic shifts utilized to game the system. For U.S. policymakers, such a reframing suggests a different response—a competitive response is not trade pressure but instead a parallel effort to understand and contest the chokepoints Beijing is attempting to seal. If American policy wishes to preserve leverage over China, it must orient itself around preserving leverage in the sectors China is sealing, or find new pressure points China has not yet become aware of.

Dual circulation is not an economic response to COVID, nor a reaction to trade war pressures imposed upon the West. The West had leverage through FDPRs, sanctions, and chokepoints it retained through its rein on the global economy; however, this leverage has atrophied greatly. The dual circulation policy implemented is not just reactionary; it is also preparatory for an insulated economy, untouchable to Western powers’ intervention and restriction. America's economic power, utilized against Russia and Iran, has been revealed—the West has played its hand; China's response is to mitigate its influence from the inside. The evidence of Beijing's own texts suggests a deliberate doctrine redesigned to make China's strategic position less vulnerable to these powers of pressure that Washington has depended upon in the past two decades.

The Batanes Symposium as PRC Gray-Zone Lawfare

July 13, 2026

By Jack Lindstrom

Jack Lindstrom is a junior researcher with the Mackinder Forum and the founder of Arctic Ledger, where his work focuses on gray-zone tactics, chokepoint geography, and great-power competition in the Indo-Pacific and Arctic theaters. He was selected to represent Arizona as a U.S. delegate in a bilateral exchange with Chengdu, China, through the Chengdu Sister Cities program, where discussions with Chinese counterparts touched on foreign policy issues alongside broader cultural and diplomatic engagement. He is currently pursuing a Master of International Affairs at UC San Diego's School of Global Policy and Strategy (GPS).

The Ships, the Symposium, and the Spokesperson

The waves break on the hulls of steel Chinese cruisers and destroyers in Philippine waters. These vessels, which multiplied from a handful of law-enforcement craft in early June to a sustained coast guard presence by mid-month, were undeclared. As such, the ships naturally create provocation for Manila; the rationale that followed this provocation was legal justification. Crucially, however, one must not forget that it was the fleet that first came, and the explanation that followed. There was no decree, nor an established line of communication to provide an exigency to the small military, established through routine patrols, which appeared over the cresting waves; rather, China asked for forgiveness, not permission. And yet, it was that forgiveness which salted the wound.

Traditional embassies attempt to quash false territorial stories, particularly shameful ones, with a bland statement denying the occurrence. Traditional embassies explain, deny, and move on from incidents; it is easier to resolve than to draw out internationally embarrassing incidents, or potentially concerning maneuvering. However, Chinese Embassy Deputy Spokesperson Guo Wei acted contrary to this diplomatic logic and publicly criticized the Philippine Coast Guard spokesperson, Commodore Jay Tarriela. This criticism followed Commodore Tarriela's inquiry into Ambassador Jing Quan's goings-on in Batanes, Philippines.

An academic event at Jinan University in Guangzhou, the symposium, took place on June 30th, 2026, wherein scholars from Jinan University, Nanjing University, the Chinese Academy of Social Sciences, and other institutions concluded that Batanes is a “natural geographical extension” of Taiwan and therefore falls under Chinese sovereignty. The logical extension of this finding was the conclusion that the Philippine administration of the islands “lacks historical and legal basis.” Ambassador Jing Quan visited Batanes from June 16-18th, within two weeks of the symposium, although with no evident connection. Following the symposium, on July 2nd, Guangdong's state-run Newsgd/“South App” published a report on the symposium's conclusions, which was then circulated. This led to Tarriela's inquiry.

Tarriela publicly questioned whether the ambassador's prior visit was connected to, inferring potential scouting for, the claim the symposium was primed to make. This sparked the criticism from Guo Wei on Tarriela, who insisted that the symposium and visit were disconnected, going as far as accusing Philippine officials of deliberately brewing hostility between the nations. This confrontational perspective from the Chinese embassy marks a novel shift in policy; an evidently unconventional one. The embassy simultaneously distances the ambassador's visit from the symposium, while also accusing the Philippine officials of “creating unnecessary hostility”; it is a minor practice in doublethink. To establish justification to claim the islands while also claiming the present owners are acting in a hostile way creates a justification for escalation from a benign questioning, albeit one paired with an accusation, from a Coast Guard spokesperson. The tension held between these two opposing thoughts, that the claim is not official policy while also not limiting its future utility, is a fundamentally tense stance held by the Chinese embassy.

The scholars at the symposium, originating from Jinan University, Nanjing University, and the Chinese Academy of Social Sciences, among others, amounted to over 10 scholars and experts. It was these experts who concluded that Batanes is a geographical extension of Taiwan and therefore belongs to China. Critically, the nearby nations, Japan and the Philippines, are not able to establish maritime delimitation talks, as the area is legally intercepted by Taiwan, resting between the two negotiating states. This forces the military of each nation into a stagnation, rather than illegal actions. The scholars at the symposium provided an evidentiary basis of Ming and Qing dynastic jurisdiction records, Ivatan-Tao cultural ties, as well as a contested reading of the 1898 Treaty of Paris and the 1946 Treaty of Manila to establish their claim on Batanes.

Coordination, Not Coincidence: Timing, Institutions, and Intent

However, the Jinan University web statement was taken down by July 10th, once the story spread internationally. It is this repeal which marks the potential miscalculation of the consequences of the claim and the international shame of the incident. Beijing's official position claimed that it refuses to “comment on the views of the academic community,” through the Foreign Ministry, a fundamentally non-denial of the claims. The following day, the Global Times, a state tabloid in China, ran a piece claiming China “should take corresponding actions to assert its sovereignty,” including regular Coast Guard patrols and scaled-up military “countermeasures.” This surpasses a university statement; it is the mouthpiece of the government through state media deliberately promoting provocative action, international engagement, and expansion to claim foreign land as its own. It is power, ambition, weaponized through loose justification, but without the international legitimacy required to establish clear context for conflict, yet. The escalation ladder, however, posits that small transgressions will eventually amount to larger conflicts; the criticism of the Philippine Coast Guard upon questioning may serve as the start of a long chain of events leading to a catalyst of conflict, or more simply, may serve as a defensive position to offensive accusations, following its own offensive statements.

In the field of grand strategy lie the dimensions of time, scale, and space; although China primarily focuses in the open on space, evident through the nine-dash line, the importance of the Belt and Road Initiative, and most recently, the Batanes. However, China also seems to focus on the dimension of time; in May 2026, President Marcos of the Philippines and Japanese PM Sanae Takaichi met and announced plans to launch talks on delimiting EEZ/continental shelf boundaries in waters east of Taiwan. A month later, the Philippine islands of that very region are now contested by China. Prior to the academic finding of China's claim of Batanes, China's Foreign Ministry spokesperson Mao Ning had already objected to the broader Philippines-Japan alignment, thus indicating the potential underlying strategy China held regarding such actions. SeaLight of Stanford had documented that Beijing framed the Japan-Philippines talks as an infringement, then used that framing as a pretext for Coast Guard operations in the same waters; this occurred before the symposium. And so, the ships crested the white caps of the South China Sea and into Philippine waters. On June 7th, Chinese vessels passed through the Bashi Channel into the open Pacific; the Global Times dubbed it a “sovereignty declaration.” The organizers of the symposium, following roughly three weeks later, framed the event as a response to the Japan-Philippines talks, further creating a line of motive to apply pressure to the region. On July 8th and 9th, the National West Philippine Sea Summit marked the 10th anniversary of the 2016 Hague arbitral ruling; and it was within a short proximity of time that the claim surfaced, likely non-coincidental given the symbolic stakes of the summit. The legal narrative established in the symposium was built in direct parallel to the physical presence of warships, seen in the Bashi Channel patrols, which are simultaneously moving towards an aligned policy objective of undercutting the Japan-Philippines EEZ talks and justifying continuous PRC presence in the Bashi Channel/Luzon Strait.

The summit was not simply a small gathering of professors, who made a claim about sovereignty with little impact. Were that the case, the escalation of accusations would not have occurred. Jinan University is a 211 Project national university, and as such is jointly constructed by the United Front Work Department (UFWD) of the CPC Central Committee, the Ministry of Education, and Guangdong Province. This translates to a direct relationship with the state and national government, as the UFWD is a CCP body directly responsible for overseas influence operations. The same force that dictates overseas influence operations is rooted at the same university where the symposium occurred. Jinan University additionally hosts a dedicated Center for Philippine Studies oriented around strategy. Fundamentally, this is not an independent scholarship that wrote itself into a sensitive claim; instead, it is an institution that was established deliberately for this kind of soft power and narrative work to build legitimacy.

Manila's Response and the Chokepoint Stakes

The provocation in Manila took little time to take effect. DFA spokesperson Analyn Ratonel claimed that sovereignty was “settled and not up for debate,” and called the claims “flights of fancy” not worthy of dignifying. Secretary Ma. Lazaro additionally noted that the PRC's own Chinese Consulate General in Laoag has Batanes in its Philippine-assigned consular district, claiming China's consular paperwork treats Batanes as a Philippine territory, and thus contradicting any statements of claim over Batanes. Furthermore, Defense Secretary Gilberto Teodoro Jr. described the claim as “baseless” and “ludicrous,” but more importantly, as “a sign of preconceived intention,” and as such ordered increased AFP patrols across the Philippine maritime domain. Another step, as it were, up the escalation ladder.

Across the Pacific at the Stanford Gordian Knot Center, Ray Powell described the incident as a “trial balloon” and thus predicted an official Chinese government report will follow, followed by official statements. The core framing Powell established was the notion that China used the Japan-Philippines announcement as a pretext to run patrols it wanted to run anyway. The ships did, after all, come before the statement, and posit a clear intention regarding claiming sovereignty; additionally, it is easier to take over an island quietly if the navy is already in the neighborhood.

The final word on the precarious nature of the claims set by each embassy and nation reflects clear international intentions and actions that follow suit. The Batanes sit on the Bashi Channel, serving as a strategic gap in the first island chain, which links the South China Sea to the open Pacific, thus making it directly imperative to naval powers as a chokepoint of leverage. In militant policy, such a chokepoint is leverage that China requires to expand into the Pacific, develop a blue-water navy, and amass power. In conjunction with power must come legitimacy, and as such the academic claim, although deniable from the state, serves as an influence campaign that, if successful, is reusable elsewhere across the first island chain or other disputed waters. Should this be established as a pattern, it would allow Chinese action to be continuously expansive with the steady beat of naval involvement, followed by a statement, followed by action and escalation. First come the ships, seen as no threat at all, then come the statements of sovereignty, giving the ships incentive to remain, and last comes the escalation, giving the ships reason to fire. Lastly, this serves as a pressure test in Japan-Philippines relations, serving as a direct response to the talks of opening EEZ, testing not only Japan-Philippine alignment and coordination, but also US involvement in the region. Should Powell's prediction of PRC endorsement arise, in tow with expanded patrol activity, the path set by China is clear, and a pattern will be established for quiet conquest.

Student Army: The Hidden Military Logic Behind China's University Purge

Beijing's elimination of 12,200 university programs is being read as a fix for a youth jobs crisis. It is better understood as the latest expansion of China's civil-military fusion doctrine into the classroom.

By Jack M. Lindstrom   |   July 2026

The number is 12,200. That is how many undergraduate degree programs Chinese universities revoked or suspended between 2021 and 2025, not students, but entire fields of study, wiped from the course catalog on orders that trace back to the Ministry of Education. They were replaced with roughly 10,200 new ones, part of a reshuffle that touched more than 30 percent of the country's undergraduate offerings in just four years. The new programs skew overwhelmingly toward Beijing's self-declared "future industries" (robotics, semiconductors, artificial intelligence). The eliminated ones cluster in arts, humanities, foreign languages, and management.

Most coverage has read this as a jobs fix: youth unemployment above 16 percent, an oversaturated humanities market, graduates without prospects. That framing is not wrong, exactly; it is simply incomplete. This is not merely curricular modernization, and it is not simply damage control for a slack labor market. It is the newest front in a decade-old state doctrine, military-civil fusion (MCF), extending its reach into the one institution China had not yet fully absorbed: the undergraduate curriculum itself. Beijing is engineering a workforce of hard-science graduates while dismantling the disciplines that produce diplomatic and cultural capacity, a deliberate trade of soft power for military-industrial output, executed through the classroom.

The cuts fall hardest on foreign-language and area-studies programs, disciplines that have historically supplied China's diplomatic corps, trade negotiators, and cultural intermediaries. That is a strange place to economize if the goal were only efficiency: foreign language is the mouthpiece of diplomacy, whatever inroads machine translation makes. A China that trains fewer Arabic, French, or English speakers is not a China turning inward; it is a China betting that it can impose its own language and terms on partners rather than meet them in theirs. Read against Beijing's Belt and Road relationships, this looks less like retrenchment than a wager that technical and economic leverage can substitute for the diplomatic fluency it is choosing not to reproduce.

The United States pioneered outsourcing military functions to the private sector, most visibly through Blackwater's operations in Iraq: contractors operating alongside, but organizationally separate from, the state. China's version of civil-military blending is structurally different: not contractors beside the state, but civilians embedded within it. Under Xi Jinping, the Central Commission for Military-Civil Fusion Development has driven a fusion of civilian and military production that analysts at the Center for a New American Security describe as a policy of maximizing linkages between the civilian economy and the defense sector, distinct from a Western-style military-industrial complex. Research from Georgetown's Center for Security and Emerging Technology finds that a majority of China's suppliers for AI-related military hardware are now civilian companies and universities rather than traditional state-owned defense enterprises, direct evidence of MCF's spread into the tech and education sectors.

This is not incidental. RAND's assessment of China's defense-industrial base finds that military-civil fusion allows the state to direct university-based research toward prioritized science and technology fields, and that China's quality-adjusted military patent output grew at an average annual rate of 16 percent between 2015 and 2019 as that direction tightened. Campuses have followed the incentive. The China Defence Universities Tracker, built by the Australian Strategic Policy Institute, has identified hundreds of MCF-linked platforms and more than 160 defense laboratories across Chinese campuses, supporting PLA priorities in deep learning, machine vision, and intelligent robotics.

The restructuring of undergraduate programs is the supply side of that pipeline; the demand side is the military technology Beijing has already encouraged the PLA and state-owned defense conglomerates to source from the civilian sector. China's testing system feeds it: a high score on the STEM-heavy gaokao, entrance into a prestige university, and a curriculum increasingly stripped of anything that isn't engineering, AI, or robotics. A university system that produces specialists in those fields while deliberately shedding historians, translators, and philosophers is a university system optimized for MCF input, not simply for the labor market. In Innovate to Dominate, the scholar Tai Ming Cheung traces exactly this mechanism: a techno-security state converting civilian technical capacity into military advantage. The university purge is simply the latest instrument for doing so.

Every reallocation has a cost, and for China that cost is soft power. Beijing's own flagship cultural-diplomacy vehicle, the Confucius Institute network, has already been contracting for several years amid Western scrutiny; a peer-reviewed study in The Pacific Review documents more than 100 Confucius Institute closures in the United States alone. A generation of graduates with no foreign-language training and no humanities formation will not reverse that trend. Technology has compressed the mechanics of communication, letters into emails, and soon perhaps most translation into a keystroke, but it has not eliminated the need for the human intermediaries who conduct diplomacy. Beijing's bet is that economic dependency can substitute for cultural fluency. That bet deserves scrutiny, particularly as the twenty-first century's contests are increasingly fought through economic and technological leverage rather than force, a domain where soft power historically retains disproportionate value.

There is a second-order opening here, and it is not automatically Washington's. If China is retreating from cultural and linguistic diplomacy in favor of technical output, the space it vacates, concentrated in Africa, Southeast Asia, and Central Asia. It will not stay empty. But the Council on Foreign Relations has noted that Washington has shown little appetite for filling that kind of role in recent years. The structural opening will exist regardless of who takes it. Whether it is filled by American, regional, or other actors is an open question, but it is a question China's own restructuring is creating.

The closure of China's humanities programs is being read as a story about education and a fading interest in culture. It is better read as a strategy: not a response to market signals alone, but a deliberate reallocation of human capital toward the pipeline that already runs from Chinese universities into the PLA's technology base. Whether the wager pays off depends on a question neither Beijing nor Washington can yet answer with confidence: whether the next phase of great-power competition rewards the kind of power China is building, or the kind it is choosing to let go.

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