What this means in concrete terms hasn't been explained; however, to me it is obvious that China is trying to isolate its national economy from the international market while continuing to enjoy the benefits of the international markets. That effectively reverses Deng Xiaoping's opening of the Chinese economy also termed “great international circulation” strategy. It also means that China is trying to screw the rest of the world by exempting the domestic economy from the rules of the international market while taking full advantage of the international market for its domestic benefit.
Since before Deng's modernization, it was always clear that China faces a dilemma in that it tries to maintain totalitarian political control by the CCP while economically opening to the outside. To fully modernize the economy, China would also have to modernize its political institutions by introducing democracy and transparency. That, however, is incompatible with totalitarian rule.
In the last 30 years, that dilemma has been papered over by promising a gradual opening of the Chinese economy while rejecting all political reforms. The "dual-circulation" strategy is to cut through the dilemma by pulling the woolies over our eyes, but it would be very naïve to believe that China's trading partners will be so stupid as to go for it.
The dual-circulation strategy also resonates with China's past. Before Deng's opening, state corporations like Citic served as trading conglomerates with a monopoly for international trade, wherein all domestic companies had to go through these corporations if they wanted to trade with the outside. In imperial China, the Hongs had a virtual monopoly on foreign trade. Any foreign company wanting to trade with China had to trade through these Hongs.
In the West, there are examples of parallel economies. For examples, the UK is about to set up free-trade zones for international trade that are not subject to the UK's rules and regulations. The UK's free-trade zones are to screw the EU, but they will in the end screw British workers who are forced to work in the free-trade zones without regulatory protection.
Following Trump's MAGA policy there are thus numerous tendencies of countries trying to protect their national economy from the international market while continuing to benefit from the international market. Brexit is an example of ultra free-marketeer protectionists.
China’s central leadership proclaimed that the nation will “fully bring out the advantage of its superlarge market scale and the potential of domestic demand to establish a new development pattern featuring domestic and international dual circulations that complement each other.”
The new strategy could become a key priority in the Chinese government’s 14th five-year plan for 2021 to 2025.
It is believed that the strategy is being advocated by Vice Premier Liu He, President Xi Jinping’s top economic adviser who headed China’s negotiators in the trade talks with the United States.
What we know about China's 'dual circulation' economic strategy