Abstract: While China’s economy has quickly become the world’s factory by embedding in the global value chain, it has also gradually fallen into the low-end dilemma of the global value chain. This fact highlights the paradox of the development of traditional global value chains. By combing the research context of global value chain theory, the underlying causes can be roughly classified into three categories: technical barrier theory, institutional rule theory, and development strategy theory. These studies depict the overall outline of the development of global value chain, but ignore the inherent limitations of the static comparative advantage assumption in its theory, so they can not explain the real reason why China falls into the low-end dilemma of global value chain. Facing the challenge of the current countercurrent of economic globalization, the development of domestic demand led global value chain based on dynamic comparative advantage will help to break through the limitations of traditional global value chain theory and accelerate the formation of a new development pattern of dual circulation.
