China has favorable conditions for continuously expanding domestic demand (new knowledge and new perception)

Domestic demand is the fundamental driving force for China's economic development. The report of the 20th National Congress of the Communist Party of China proposed to "focus on expanding domestic demand, enhancing the fundamental role of consumption in economic development, and the key role of investment in optimizing supply structure", and made a series of important deployments. Since the beginning of this year, under the strong leadership of the Central Committee of the Communist Party of China, the overall economic operation of our country has rebounded and improved. The support of domestic demand for economic recovery has increased, and the contribution rate of final consumption expenditure to economic growth in the first half of the year reached 77.2%.

From the perspective of investment, fixed assets investment increased in quantity and quality, and investment in infrastructure and manufacturing continued to strongly support the steady growth of investment. From January to July, investment in infrastructure and manufacturing increased by 6.8% and 5.7% respectively, both faster than the growth rate of all investments. From the perspective of consumption, the rapid growth of service consumption is a prominent highlight of economic operation. From January to July, the year-on-year growth of service retail sales was 20.3%. Service consumption such as summer tourism has significantly rebounded, and the retail sales of consumer goods in society have also continued to grow. From the perspective of market cycles, emerging industries are experiencing strong production and sales, and the production of new energy vehicles, photovoltaic cells, and other new products is growing rapidly, driving the year-on-year growth of 12% and 15.1% in the added value of large-scale automobile manufacturing, electrical machinery, and equipment manufacturing industries from January to July, respectively. At present, a series of policies supporting green and low-carbon transformation and upgrading have entered a concentrated and effective period. The vitality of enterprises on the new track is accelerating, seizing opportunities in domestic and foreign markets, and driving related manufacturing industry profits to maintain double-digit growth, demonstrating the practical results of coordinating the expansion of domestic demand and deepening supply side structural reform. At the same time, China needs to accelerate its recovery, which has also created more market opportunities for foreign investment and development in China. Since the beginning of this year, the number of newly established foreign-invested enterprises has maintained a rapid growth, and many multinational companies have set up or added production lines, actively integrating into China's industrial digitization and intelligence process, and sharing the dividends of China's development.

One important reason for the enhanced support of domestic demand for economic recovery is that since the beginning of this year, various departments and regions have focused on the key and difficult issues in economic operation, and have successively launched policy measures to stabilize investment and promote consumption, especially accelerating the implementation of measures to expand bulk consumption in automobiles, electronic products, home furnishings, and other sectors, as well as efforts to mobilize the enthusiasm of private investment. Of course, expanding domestic demand also faces some challenges. For example, the severe and complex external environment has an impact on stabilizing China's industrial chain and expanding domestic demand, local employment and income expectations are still not stable enough, and the potential for residential consumption needs to be further explored and released. It should be emphasized that during the process of economic recovery and tortuous progress, it is normal for some indicators in the domestic demand sector to experience temporary fluctuations. Currently and in the future, there will be a significant increase in positive factors and favorable conditions for stable growth in China, and there is still great potential to expand domestic demand.

There is great potential for expanding effective investment and improving consumption quality and capacity. China is the world's largest potential consumer market, with per capita GDP approaching the threshold of high-income countries. Consumer upgrading has significantly accelerated, and the market prospects are broad. At the same time, accelerating the transformation and upgrading of traditional industries, optimizing the layout of new infrastructure, and implementing projects to address shortcomings in the field of people's livelihood will generate more investment demand. The key is to accelerate the cultivation of a complete domestic demand system, expand effective investment, focus on promoting high-quality development of investment, and support the formation of a virtuous cycle of supply and demand promoting each other and production and sales advancing simultaneously.

Improving supply quality will lead and create more new demand. Continuously deepening the supply side structural reform, promoting the integration and innovation of advanced manufacturing and modern service industries, accelerating the cultivation of new industries and formats, focusing on increasing the supply of mid to high end goods and services, and carrying out actions to improve the quality of goods and services throughout their entire life cycle. This is conducive to further accelerating the release of domestic demand potential in areas such as green and low-carbon, medical and health, digital creativity, artificial intelligence, and cultural tourism.

The coordinated development of urban and rural areas contains huge market space. Accelerating the promotion of a new type of urbanization centered on people, enhancing the comprehensive carrying capacity of regional consumption, narrowing the development gap between urban and rural areas, will unleash more potential for domestic demand. Deepening the reform of the income distribution system, improving the level of equalization of basic public services, and improving the multi-level social security system will help enhance the consumption capacity and willingness of residents. Cultivating and constructing international consumption center cities with global influence, creating a group of regional consumption centers with strong driving force, is conducive to improving the consumption environment and innovating consumption scenarios.

Accelerate the construction of a unified national market to stimulate endogenous momentum. In recent years, we have deepened the reform of market-oriented allocation of factors, and the level of market-oriented allocation of factors has continuously improved. China's attractiveness to high-end global factors has continued to increase. Accelerate the implementation of various deployments for building a unified national market, continue to carry out actions to build a high standard market system, promote smoother flow of goods and factors between urban and rural areas, and inject strong and lasting momentum into high-quality economic development.