Think Tank

Why is it so important to expand domestic demand?


On January 31, the Political Bureau of the CPC Central Committee conducted the second collective study on accelerating the construction of a new development pattern. Pan Helin, co-director and researcher of the Research Center for Digital Economy and Financial Innovation at the International Business School of Zhejiang University, said in an interview with that in the short term, China's economy will have insufficient domestic demand in 2022, and it needs to boost domestic demand to boost the economy. The retaliatory consumption and investment after the epidemic will drive the growth of domestic demand, and China's economy will achieve a comprehensive recovery in 2023. In the long run, the driving force of economic growth is innovation, and high-quality development should be achieved through innovation. Economic growth can no longer simply pursue scale, but should change from quantity to quality. We should optimize the industrial structure and promote the transformation and upgrading of enterprises through innovation. The most important thing is to realize the improvement of productivity level through innovation, and then solve some practical problems in China, such as unbalanced development, insufficient social security capacity, and ecological, birth rate, pension and other issues. In addition, Pan Helin also pointed out that China's economy should reduce its external dependence. Affected by the economic cycle, the demand of markets such as the United States and Europe will fluctuate. The growth space of the export market will be limited for a period of time in the future. The export competition among countries will become increasingly fierce, and China's "demographic dividend" will gradually weaken. In the future, China's export goal will shift from pursuing surplus to pursuing balance. The obstruction of exports and the increase of imports make it necessary for China to establish a domestic demand market with sufficient capacity to digest the capacity of export commodities. The economic troika is net export, consumption and investment. In order to maintain economic growth, it is necessary to stimulate domestic demand and improve the driving effect of consumption and investment on economic growth when net export is blocked and the dependence on foreign trade is reduced. How to expand domestic demand? Pan Helin believes that in the short term, government consumption subsidies, consumption vouchers, project investment, etc. can stimulate domestic demand, especially focusing on new infrastructure and new consumption. To expand long-term domestic demand, there are two key points: one is to increase household income, which refers to the relative income level under stable inflation; Another point is to ensure the life of residents, including pension, health, education, fertility and other aspects, so that the people have more confidence in the future. In recent years, new consumption relying on new technologies such as Internet, cloud computing and artificial intelligence has become a new driving force for economic development. Pan Helin said that new consumption is supply-side optimization. By improving the supply, on the one hand, it can optimize the stock demand and let consumers have a better experience, so as to stimulate consumption behavior, on the other hand, it can create demand increment, and through new products and new services, it can tap the unmet demand of consumers, so as to expand domestic demand. He pointed out that at the present stage, new consumption is based on networking, intelligence, ecology and digitalization

Edit:wangwenting Responsible editor:xiaomai

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