Abstract: The circulating current issue presents a significant challenge for reactive power compensators utilizing modular multilevel converter technology, this study analyzes the compensation principle of MMC-PRC and establishes a mathematical model for a single-phase MMC. The mathematical expression of the arm circulating current is derived accordingly. Based on this analysis, a linear active disturbance rejection control based circulating current suppression controller is designed. This controller treats the arm circulating current as a "disturbance", enabling its real-time estimation and compensation via a linear extended state observer. Finally, Simulink simulations verified that the LADRC controller provides effective suppression of the 2nd-harmonic circulating current and ensures stable DC-side output voltage levels with minimal fluctuation.