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E-mail China.org.cn, March 10, 2024
Yicai:
The Central Economic Work Conference, held at the end of last year, pointed out that insufficient effective demand is a difficulty and challenge that needs to be addressed currently. This year's government work report makes arrangements for expanding domestic demand. What efforts will be made in this regard? Thank you.
Huang Shouhong:
Domestic demand has always been the main driving force of China's economic development. In recent years, it has accounted for more than 90% of economic growth. Following a smooth transition in epidemic response last year, China has seen a fast recovery in domestic demand. However, difficulties and issues also emerged during the expansion of domestic demand. The government work report has made arrangements in this regard, mainly focusing on three aspects:
First, we will promote steady growth in consumer spending. This year, we will take a full range of steps to unlock potential demand by increasing incomes, improving supply, and reducing restrictions. Potential demand is evident. Since last year, activities such as Village Super League football games, village Spring Festival galas, ice and snow tourism, and crossover collaborations have gained immense popularity. Street shopping in cities and leisurely tours in rural areas have become new trends, while domestic brands are gaining traction with consumers. These trends highlight the significant potential of new consumption patterns, which we plan to expand further this year. At the same time, we will boost spending on automobiles, home appliances, and other big-ticket items. That will include both newly added items as well as equipment renewal and trade-in of consumer goods. Additionally, we will propel the expansion and improvement of service consumption. In recent years, with economic development and the improvement of people's living standards, the demand for services has surged and service consumption has enjoyed sustained growth. This year, new measures will be taken to respond to this trend.
Second, we will work to increase effective investment. On the one hand, we will fully leverage the stimulating effect of government investment. In terms of volume, both central budgetary investment and local special bonds will increase compared to last year. In terms of investment areas, these investments primarily target areas where we need to address deficiencies and boost momentum, such as scientific and technological innovation, energy conservation, emission reduction, and ensuring people's well-being. On the other hand, we will stabilize and expand private investment. Relevant departments formulated policies to promote private investment last year, and this year, they will further implement and enhance some new measures proposed in the government work report.
Third, we will promote the integration of investment and consumption. This year, more emphasis will be placed on coordinating the expansion of domestic demand and deepening supply-side structural reform to create a virtuous cycle of mutual promotion between consumption and investment. For instance, not long ago, the Central Commission for Financial and Economic Affairs and a State Council executive meeting assigned an important task: to promote large-scale equipment renewal and trade-in of consumer goods. This initiative is significant for boosting both consumption and investment. The combination of these two aspects is one way of coordinating investment and consumption and tapping into the potential of domestic demand. Additionally, we will actively advance people-centered new urbanization, which offers comprehensive benefits. From the perspective of domestic demand, it serves as a large platform integrating investment and consumption. Last year, China's proportion of permanent urban residents in the total population was 66.2%, which still lags behind the rates of over 80% seen in developed countries. The urbanization rate of registered residents was even lower. From this perspective, there is still considerable room for development and improvement in China's new urbanization. An increase in urbanization will generate significant demand for both consumption and investment. According to relevant estimates, the consumption demand brought by a person moving to the city is significantly higher than that of a rural resident. This year, as a matter of priority, we will move faster to grant permanent urban residency to eligible people who have moved to cities from rural areas , as outlined in the government work report.
Thank you.
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