"Insufficient domestic demand" refers to the decline in the production and sales rate of domestic products due to the low consumption demand in the aggregate social demand, which affects economic growth.
How can we solve the problem of an excessively high savings rate, thereby stimulating the growth of domestic demand and promoting economic development?
Domestic demand is insufficient, and economic development is hindered
The mainland's aggregate social demand is mainly composed of three parts: consumption demand, investment demand, and net export demand, and consumption demand is the main body of aggregate social demand, which includes household consumption demand and government consumption demand.
Among the three needs, consumer demand plays a very important role in the mainland's economic growth, but the mainland's savings rate has always been high, which means that residents are more inclined to save money than to spend.
A high savings rate means that the level of consumption is relatively low, and low consumer demand means that consumption has a smaller role in driving GDP, which means that domestic demand is insufficient, which affects economic growth.
The high savings rate hinders the growth of consumption, and the reasons for the high savings rate are also multifaceted, mainly due to unequal income distribution, imperfect social security, industrial structure problems, and so on.
1. Uneven distribution of income
Income distribution on the mainland has always been very uneven, with the high-income group accounting for the majority of the income and the low- and middle-income groups accounting for very little of the income.
On the mainland, where income inequality is severe and continues to increase, the result is that the high-income group accounts for the majority of the income, but the spending power is much lower than the income.
Although the income occupied by the middle and low-income groups is not much, due to the uneven distribution of income, their consumption power is also very poor, which leads to domestic consumption demand, and the proportion is low, which leads to insufficient domestic demand in the mainland, thus affecting economic growth.
2. High savings rate
On the mainland, the savings rate has always been very high, and it has always remained high.
Moreover, mainland residents are more inclined to save money rather than consume, which has led to a high savings rate, and there are two main reasons for this, one is the imperfect social security, and the other is the uneven distribution of income.
In the mainland, the social security system is not perfect, whether it is basic pension insurance, medical insurance, or unemployment insurance, it cannot meet the needs of residents, so in this case, residents are more inclined to save money to cope with risks.
And in the mainland, the reimbursement rate of medical insurance is very low, so when you see a doctor, you need to spend a lot of medical expenses, and this is also a risk, so residents in this situation are more inclined to save money, but do not spend it.
3. Industrial structure issues
On the mainland, the industrial structure has always been very backward, and the industrial structure is overly dependent on manufacturing and export-oriented industries, resulting in narrow domestic demand and low consumer demand.
Moreover, the mainland's GDP growth has always depended on investment and exports, and in this case, it will lead to insufficient domestic demand, and it will also lead to overcapacity, but exports will be affected by the international market, so the mainland's economic growth is facing great pressure.
The slowdown in investment growth will lead to a decline in the profit margin of enterprises, which will lead to a decline in the production enthusiasm of enterprises, which will also affect the willingness of enterprises to invest, which will lead to a decrease in investment demand, and in this case, it will lead to a lack of domestic demand, and it will also lead to a slowdown in GDP growth, which will lead to a slowdown in economic growth, which will exacerbate the employment pressure on the mainland.
How to solve the problem of insufficient domestic demand?
How to solve the problem of insufficient domestic demand, which will lead to slowing economic growth, increased employment pressure, and exacerbated structural problems?
1. Promote income distribution reform
The mainland's economic growth has always been dominated by wealthy regions, and the consumption power of low- and middle-income groups is very weak, resulting in insufficient domestic demand, so the mainland needs to change this situation and strengthen the reform of income distribution, so that the consumption power of low- and middle-income groups can be improved, so as to promote the growth of domestic demand.
To improve the consumption power of low- and middle-income groups, it is necessary to strengthen education and training, improve human capital, strengthen education and training, and improve the skill level of workers, which will help to increase income levels and increase consumption power.
2. Improve the social security system
The mainland's social security system is also very imperfect, so it is necessary to speed up the improvement of the social security system, so that residents can get old-age security, medical security, etc. in old age, so as to reduce residents' risk awareness and no longer blindly save.
3. Accelerate the development of the service industry
The development of the mainland's service industry has always lagged behind, so the mainland needs to speed up the development of the service industry to promote the growth of domestic demand.
4. Policies to stimulate consumption
In addition to stimulating consumption, it can also promote high-quality consumption, improve consumption structure, and promote the growth of domestic demand by guiding consumption upgrading.
5. Encourage innovation and entrepreneurship
The mainland needs to speed up economic restructuring and promote industrial upgrading, so as to cultivate new consumption growth points and thus promote the growth of domestic demand.
epilogue
Insufficient domestic demand will bring huge economic pressure to the mainland, so the mainland needs to adopt a series of policy measures to promote the growth of domestic demand, and at the same time, it also needs to promote green and sustainable development, cultivate a green consumer market, meet the consumer demand with increased environmental awareness, and promote the expansion of domestic demand.
In this regard, what is your view on promoting the growth of domestic demand?