Wang Qing: The orientation and ideas of establishing an effective system for expanding domestic demand

Source: China Economic Network - Economic Daily

Focusing on expanding domestic demand is an inevitable choice to hedge the downside risks of the world economy, and it is also the strategic basis for us to cope with various risk challenges. General Secretary Xi Jinping delivered an important speech at the opening ceremony of the seminar on the study and implementation of the spirit of the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China by major leading cadres at the provincial and ministerial levels, stressing: "It is necessary to establish an effective system for expanding domestic demand, release the potential of domestic demand, accelerate the cultivation of a complete domestic demand system, strengthen demand-side management, expand resident consumption, enhance consumption levels, and make the construction of a super-large-scale domestic market a sustainable historical process." "This points out the direction and path for the new development stage to better play the role of the super-large domestic market, smooth the domestic cycle, and then build a new development pattern."

Facing the future, it is necessary to adhere to the implementation of the new development concept, aim at the main direction of building a new development pattern, accelerate the establishment of an effective system for expanding domestic demand, take the improvement of people's livelihood as the guide, take reform and innovation as the driving force, continue to expand consumption and effective investment, strongly support and promote the formation of a strong domestic market, and accelerate the construction of a new development pattern with the domestic cycle as the main body and the domestic and international dual cycles promoting each other.

The establishment of an effective system for expanding domestic demand is of great significance to the construction of a new development pattern

Why should we speed up the establishment of an effective system for expanding domestic demand? This issue can be better grasped from several aspects.

First of all, it is analyzed from the purpose of expanding domestic demand. In the stage of China's rapid economic growth, we are accustomed to using the "troika" of investment, consumption and net exports to conduct short-term analysis of the economic situation. This analytical framework treats investment, consumption and net exports as relatively separate parts, which can easily sever the organic link between investment and consumption. Especially in the period of high economic growth, the pulling effect of investment and net exports on economic growth is more prominent, which makes consumption more regarded as the "stabilizer" of economic growth. Looking back, when the economic situation is better, growth mainly relies on investment and net exports, while when the economic situation is not as expected, everyone expects consumption to play a "make-up" role.

As China's economy enters a stage of high-quality development, especially in the face of profound changes in the development environment at home and abroad, the Party Central Committee has clearly proposed to give play to the basic role of consumption in economic development and accelerate the construction of a new development pattern with the domestic cycle as the main body and the domestic and international dual cycles promoting each other. In 2020, China will become the only major economy in the world to achieve positive economic growth, and this "good result" is based on the endogenous driving force for us to give full play to institutional advantages, rely on a strong domestic market, continuously stimulate the potential of domestic demand, and continue to strengthen economic growth. In the new stage of development, we must continue to expand domestic demand, in addition to improving investment efficiency and continuing to expand consumption, but also to strengthen the organic connection between investment and consumption, which must be based on building an effective system for expanding domestic demand.

Second, it is analyzed from the means of expanding domestic demand. After a long period of development and summarization, China has established a relatively complete policy system in the fields of investment and export. As for expanding consumption, since the reform and opening up, residents' consumption has moved forward along the track of wave-like development from food textiles to home appliances to housing, automobiles and services. In the development stage of sustained and rapid economic growth and strong demand for commodity consumption, the problem of insufficient effective demand is less frequent. Therefore, systematic and long-term pro-consumption policies are not yet perfect. Only when the economy declines, some short-term stimulus policies will be implemented for specific commodity categories and urban and rural areas, such as "home appliances going to the countryside" and "cars going to the countryside". Most of these short-term stimulus policies are implemented under given supply conditions, and even promote the consumption of existing commodities, with certain side effects such as overdraft consumption.

At present, we propose to expand domestic demand under the new situation, put more emphasis on establishing a complete domestic demand system, put more emphasis on the organic combination of expanding domestic demand strategy and deepening supply-side structural reform, and more clearly lead and create new demand with innovation-driven and high-quality supply. Expanding domestic demand is no longer a stopgap measure to solve short-term economic problems, but a long-term strategy for the medium- and long-term and overall economic development. Under the new situation, consumption must have the ability to continue to innovate and expand, and investment should dynamically conform to the general trend of consumption reform and adapt to the new requirements of the development of a strong domestic market, so that domestic demand can provide a steady stream of development momentum for building a new development pattern.

Third, it is analyzed from the blockages and obstacles faced by expanding domestic demand. With China's GDP breaking through the 100 trillion yuan mark for the first time, the per capita GDP reaching 10,000 US dollars and the per capita disposable income of residents exceeding 30,000 yuan, resident consumption has entered a new round of upgrading and change, and the demand for personalized, diversified, multi-level quality and enjoyment consumption continues to grow. However, at the same time, the imbalance between supply and demand is also becoming increasingly prominent, and the supply of high-quality goods and services is difficult to meet the needs of residents for consumption upgrading, which not only affects the due contribution of domestic demand to national economic growth, but also causes the loss of a large number of upgraded consumption.

At present, China has many shortcomings and blockages in improving the efficiency of government investment and public expenditure, optimizing the tax system, reforming and opening up the service industry, building and improving the modern market system, building a modern circulation system, promoting the innovation of product format business models, and accelerating the construction of new infrastructure, especially some institutional and institutional obstacles. It is necessary to pay attention to demand-side management, open up blockages, make up for shortcomings, and run through all aspects of production, distribution, circulation and consumption. Only by comprehensively deepening reform and making effective institutional arrangements in rationally guiding consumption, savings, and investment can we continuously eliminate institutional bottlenecks and accelerate the pace of building a new development pattern.

Clarify the basis for judging the effectiveness of the expanded domestic demand system

In short, whether it can support and promote the construction of a new development pattern is the main basis for measuring the effectiveness of the expansion of the domestic demand system. Further, an effective system for expanding domestic demand needs to play a more important role in the following.

First, it can continuously improve the quality of people's lives and effectively improve people's livelihood and well-being. Our economic and social development policy must adhere to the fundamental purpose of meeting the people's growing needs for a better life. Whether or not it effectively improves the efficiency of investment and the quality of supply, enhances the quality of life of the broad masses of the people, and whether it enhances the people's sense of gain, happiness and security are all evaluation yardsticks for measuring the effectiveness of the system of expanding domestic demand.

The second is to increasingly enhance the systematization and coordination, and effectively promote the virtuous circle of investment and consumption. Accelerating the cultivation of a complete domestic demand system will inevitably require strengthening forward-looking thinking, overall planning, strategic layout, and overall advancement, and actively handling local and overall, short-term and long-term, domestic and foreign relations. To effectively expand the domestic demand system, it is necessary to coordinate the relationship between supply and demand, investment and consumption, domestic demand and external demand, form a coordinated interaction and virtuous circle between investment and consumption, form a higher efficiency and higher quality input-output relationship, and achieve a dynamic balance of the economy at a high level.

The third is to continuously consolidate and enhance the energy level of the strong domestic market. Continuing to maintain and enhance China's super-large-scale market advantages and continuously consolidating and upgrading the energy level of a strong domestic market are the basic prerequisites for ensuring the sustainability of expanding domestic demand. Continuously promoting consumption innovation, stimulating new consumption, continuously expanding the scale of the existing consumer market, and forming a diversified and diversified consumption pattern are the basis for strengthening innovation-driven and expanding effective investment. To effectively expand the domestic demand system, it is necessary to form a long-term mechanism to promote the sustained expansion of domestic demand, so that domestic demand has a lasting and strong growth momentum, so that the construction of a super-large domestic market becomes a sustainable process.

Fourth, it can effectively pass through blockages, make up for shortcomings, and strengthen weak points, and effectively smooth the domestic cycle. In the face of many problems or obstacles affecting the continuous upgrading of residents' consumption and the steady improvement of investment efficiency, taking blockages, making up for shortcomings, and strong and weak points as important policy objectives, the effective expansion of the domestic demand system should continue to consolidate the support system and institutional environment for the development of domestic demand, enhance traditional consumption, cultivate new types of consumption, appropriately increase public consumption, promote the effective conversion of savings into investment, further open up domestic demand space, and make the domestic cycle more smooth.

We should comprehensively push all aspects of expanding domestic demand to a new height

General Secretary Xi Jinping emphasized: "Entering a new stage of development has clarified the historical orientation of China's development, the implementation of the new development concept has clarified the guiding principles of China's modernization construction, and the construction of a new development pattern has clarified the path choice of China's economic modernization." This important exposition provides an important guideline for comprehensively pushing the work of expanding domestic demand to a new height.

First, the new development concept must be implemented completely, accurately and comprehensively. Adhering to the new development concept is the basic strategy that our party and state must adhere to for a long time and comprehensively implement in the development of the cause. In the work of actively expanding domestic demand, we must implement the new development concept in a complete, accurate and comprehensive manner, ensure that all work is always carried out under the correct guidance, and achieve higher quality, more efficient, fairer, more sustainable and safer development. While making it clear that innovation is the first driving force leading development, we should properly handle the relationship between the local and the overall situation, the current and the long-term, the key and the non-key, promote the harmonious coexistence between man and nature, and implement a high level of opening up. It is also necessary to divide the "cake" that is constantly getting bigger and bigger, and constantly enhance the people's sense of gain and happiness.

Second, it is necessary to speed up the transformation from economic orientation to people's livelihood orientation. The purpose and foothold of expanding domestic demand lies in better meeting the people's growing needs for a better life. The Fifth Plenary Session of the 19th Central Committee of the Communist Party of China included "people's livelihood and well-being reaching a new level" as the main goal of economic and social development in the "14th Five-Year Plan" period; the Central Economic Work Conference also proposed that "we must fully tap the potential of the domestic market and expand consumption and effective investment with the improvement of people's livelihood as the orientation". In the new development stage, the work of expanding domestic demand needs to be better oriented to people's livelihood, and further expand in the fields of income distribution, social security, public services, environmental protection, social governance, rural revitalization, emergency security and other areas of people's livelihood.

Third, while tightly twisting the main line of supply-side structural reform, we should pay attention to demand-side management. On the one hand, we must continue to adhere to the supply-side structural reform as the main line, continue to improve the quality of supply and improve the efficiency of economic growth, on the other hand, we must pay more attention to demand-side management, and strive to eliminate structural problems and institutional obstacles that restrict the release of domestic demand potential. In the supply side and the demand side of the synergy of the force, through the production, distribution, circulation, consumption of all links, the formation of demand to drive supply, supply to create demand at a higher level of dynamic balance, to provide support for the construction of a new development pattern.

(The source of this article: Economic Daily The author is Wang Qing, deputy director of the Market Economy Research Institute of the Development Research Center of the State Council)