Huang Maoxing and Xue Jianhan: Accelerating the Cultivation of a Complete Internal Demand System and Expanding Domestic Demand in an All-Round Way
Domestic demand is the primary driver and stabilizing anchor of economic growth, and the all-around expansion of domestic demand is a critical strategic measure for promoting China’s current economic development. The Third Plenary Session of the 20th CPC Central Committee proposed to "accelerate the cultivation of a complete domestic demand system." The 2024 Central Economic Work Conference deployed nine key tasks for 2025, placing "vigorosly boosting consumption, improving investment efficiency, and expanding domestic demand in all aspects" at the top of the agenda. On the new journey, we must implement the strategic requirement of expanding domestic demand, accelerate the cultivation of a complete domestic demand system, and pool our strengths to expand domestic demand in all aspects. This will push the economy to continue its recovery and improvement, striving to compose a contemporary masterpiece of high-quality development.
1. Expanding domestic demand in all aspects is the inevitable choice for promoting a sustained economic recovery
Facing a complex and severe situation characterized by increasing external pressures and rising internal difficulties, the all-around expansion of domestic demand serves as both a vital engine for the sustained recovery of our economy and a practical necessity for meeting the people's aspirations for a better life. It holds great significance for accelerating the construction of a New Development Pattern [1] and promoting high-quality development.
Expanding domestic demand in all aspects lays a vital foundation for promoting an efficient economic cycle and accelerating the construction of a New Development Pattern. On the one hand, by improving the quality and expanding the volume of consumption and increasing effective investment, we can further clear various bottlenecks [2] in the domestic economic cycle. This promotes a smooth connection between the links of production, distribution, exchange, and consumption, achieving two-way synergy between the demand side and the supply side, and strengthening the dominant role of the domestic Great Circulation [3]. On the other hand, expanding domestic demand reduces excessive reliance on external markets and injects continuous momentum into the domestic economic cycle. Specifically, by relying on the advantages of a super-large-scale domestic market, we can create a powerful magnet for high-end global resources, laying a solid foundation for the positive interaction between domestic and international dual circulation.
Expanding domestic demand in all aspects is a long-term strategy for promoting the transformation of the economic development mode. The core lies in constructing a complete domestic demand system, which primarily includes the qualitative and quantitative upgrading of consumer demand, the optimization and upgrading of investment demand, and the dynamic balance between supply and demand. These efforts help shift economic development from being factor-driven to innovation-driven, from being investment-led to being driven by the coordinated pull of consumption and investment, and from external-demand dependence to domestic-demand dominance. This shift is not a simple expansion of the scale of demand, but rather an optimization of the demand structure that forces reforms [4] in the supply system, thereby improving the overall efficiency of the economic system. This means that expanding domestic demand is, in essence, a proactive adjustment of the economic development mode and a long-term strategy for high-quality development.
Expanding domestic demand in all aspects is conducive to accelerating the optimization and upgrading of the industrial structure. Continuously expanding domestic demand provides the necessary market capacity and innovative impetus for the development of strategic emerging industries and future industries [5], thereby accelerating the construction of a modernized industrial system. The support provided by an expanded domestic demand enables local enterprises to integrate global resources more effectively, enhance their independent innovation capabilities, and occupy a more favorable position in global value chains. In the consumer sector, the demand for upgrades in commodity and service consumption will force enterprises to increase R&D investment, improve technical levels, and optimize product structures, thereby driving the transformation of traditional industries toward high-end, intelligent, and green development. In the investment field, the construction of "new infrastructure" [6] will drive the industrial application of cutting-edge technologies such as 5G, artificial intelligence, and the Industrial Internet, guiding resource factors to aggregate in strategic emerging and future industries with high efficiency and growth potential.
2. Broad space exists for expanding domestic demand in all aspects
At present, the supporting conditions and fundamental trend of China’s long-term economic improvement remain unchanged. Whether viewed from the internal logic of our economic development, market scale, growth potential, or policy support, there is strong momentum and broad space for expanding domestic demand.
A super-large-scale market provides broad room for expansion. As the world’s second-largest economy, our super-large-scale market is a prominent advantage. In 2024, China's GDP reached 134.9 trillion yuan, a year-on-year increase of 5%. The consumption and investment structures continued to upgrade, consumption models kept innovating, and market prospects remained broad. From the perspective of consumer demand, total retail sales of consumer goods reached 48.8 trillion yuan in 2024, up 3.5% from the previous year; national per capita consumption expenditure was 28,227 yuan, a real increase of 5.1%. Furthermore, household consumption is shifting from "survival-based" to "development-based" and "enjoyment-based," and from predominantly commodity-based to a balance of commodities and services, with the proportion of service consumption rising steadily. In terms of investment demand, fixed-asset investment reached 51.4 trillion yuan in 2024, up 3.2%, with infrastructure and manufacturing investment growing by 4.4% and 9.2% respectively, and high-tech industry investment growing by 8.0%. Additionally, there is an urgent need to increase effective investment in areas concerning people's livelihoods—such as education, healthcare, elderly care, and subsidized housing—to improve the quality of service provision. The potential and vitality of the domestic super-large-scale market will be further released, playing an even more significant role in expanding domestic demand.
A complete industrial system provides strong economic support. China possesses a complete, large-scale industrial system and comprehensive supply chain supporting capabilities; it is the only country in the world to possess all the industrial categories listed in the UN industrial classification. From the perspective of scope effects, comprehensive industrial coverage effectively promotes the refinement of the division of labor and the formation of efficient production networks. This not only improves production efficiency and reduces costs but also enables rapid responses to market changes, providing consumers with diverse, high-quality products and services. From the perspective of scale effects, the massive industrial scale effectively averages out long-term production costs, improves economic efficiency, and provides strong production capacity and technical reserves. Furthermore, industrial development drives employment and income growth, releasing consumption potential while helping to "siphon" global resource factors, enhancing China's position in global value chains and strengthening the economic system's overall resilience against risks.
The massive population and middle-income group provide a solid foundation. With more than 1.4 billion people and a middle-income group of over 400 million, China has formed the consumer market with the greatest growth potential in the world. Population scale implies huge market potential; as urbanization accelerates and income levels rise, consumption potential is continuously released. The middle-income group possesses high consumption capacity and a strong willingness to consume, with a robust demand for service-based consumption in education, healthcare, culture, and tourism, making them a vital driving force for expanding domestic demand.
Coordinated urban-rural and regional development provide important impetus. Regarding urban-rural development, China’s urbanization rate rose to 67% in 2024, and the income growth of rural residents outpaced that of urban residents, narrowing the income gap. With the deepening of household registration system [7] reforms and urban-rural integration policies, the transfer of rural populations to towns and cities is releasing immense consumption and investment demand. In terms of regional development, the implementation of major regional strategies—such as the Coordinated Development of the Beijing-Tianjin-Hebei Region, the Yangtze Economic Belt, the Integration of the Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area, and Ecological Protection and High-quality Development of the Yellow River Basin—has further released regional consumption potential, forming a multi-polar growth pattern.
3. Implementing the expansion of domestic demand through promoting consumption and improving livelihoods
Increase the intensity and scope of "Dual Renewal" policies to promote consumption upgrades. Boosting consumption is the primary task. We should use large-scale equipment updates and the trade-in of consumer goods (the "Dual Renewal" [8]) as a lever to steadily expand physical consumption in areas such as automobiles, home appliances, and home renovation. We must expand the coverage of these policies to meet the upgrading needs of consumers and actively expand service consumption by optimizing content and quality.
Optimize investment structures in key areas to greatly improve investment efficiency. Focus on strategic directions such as the development of new quality productive forces, urban-rural integration, and high-quality population development. Increase investment in "Two Major" [9] projects, implement urban renewal actions, and prioritize investment in fields with global and strategic significance such as technological innovation, green/low-carbon development, and "new infrastructure." Appropriately increase investment within the central government budget and make coordinated use of ultra-long-term special treasury bonds and local government special bonds to leverage social investment [10].
Create new demand through high-quality supply to promote a dynamic balance. Continuously promote innovation in technology, industry, and institutions. Fully leverage the advantages of the New Whole-of-Nation System [11] to win the battle for breakthroughs in core technologies. Use technological innovation to drive the transformation of traditional industries toward high-end, intelligent, and green development. Deepen market-based allocation of production factors and maximize total factor productivity. Ensure the supply system is better adapted to domestic demand, creating a high-level dynamic balance where demand pulls supply and supply leads and creates new demand.
Strengthen policy synergy and optimize the domestic demand environment. Fiscal policy should strengthen the pulling effect of expenditures on economic growth, focusing on precision and advancing fiscal and tax reforms. Monetary policy should focus on reducing financing costs and providing sufficient liquidity for the real economy. Use structural monetary policy tools to guide financial resources toward key areas and weak links. At the same time, place high importance on the coordination between fiscal and monetary policies to create a favorable macroeconomic environment.
Increase resident income through multiple channels and improve the social security system. Resident income is the foundation of domestic demand. We must improve the income distribution system, increasing the share of resident income in national income distribution and the share of labor remuneration in primary distribution. Emphasize an "employment-first" orientation, protect the rights of those in flexible employment and new forms of employment, and ensure that middle- and low-income groups have stable jobs and rising incomes. Solidify the social security system—including pensions, medical care, and unemployment insurance—and accelerate the improvement of the housing security system to further promote the equalization of basic public services.