The key to building a new development pattern of “Dual Cycle” lies in promoting smooth industrial linkages and virtuous economic circulation, and the promotion of coordinated development between the supply side and the demand side. The modern circulation system is the core link in the national economic cycle, the bridge and link between the supply side and the demand side, and plays an important role in solving the pain points, difficulties and blocking points in the construction of the new development pattern of “Dual Circulation”. Focusing on smooth Dual Circulation, this paper constructs a logical model for the construction of modern circulation system of “four-function building, six-transformation and five-system upgrading” and puts forward the important role of modern circulation system in realizing higher-level production and consumption cycle, higher-quality urban and rural cycle, higher-level domestic and foreign trade market cycle and more coordinated cross-regional market cycle. Then, focusing on the four functions of information transmission, structural traction, factor optimization and technological innovation, this paper expounds the internal mechanism and key mechanism of smooth Dual Circulation of modern circulation system, and puts forward corresponding countermeasures.