Liu Wei: Creatively Providing an Important Basis for Achieving Scientific Macroeconomic Control
The relationship between aggregate supply and aggregate demand is the fundamental issue of macroeconomics. In the New Era, promoting high-quality development inherently requires coordinating the relationship between aggregate supply and demand and refining macroeconomic regulation. An important component of the first volume of the Selected Economic Works of Xi Jinping is its basis in the great practice of China’s economic development entering a "new normal" and a new developmental stage—and achieving rapid progress therein—since the start of the New Era. It firmly grasps the salient characteristics of the profound changes occurring on both the supply and demand sides of China’s economy, as well as the historical shift in the relationship between the two. Aiming for a new dynamic equilibrium between supply and demand, and maintaining the unity of theory and practice, this work creatively puts forward a series of major new judgments and important discourses on strengthening macroeconomic regulation and coordinating the relationship between aggregate supply and aggregate demand. For example, "Accurately Grasping the Decisive Role of the Market in Resource Allocation and Better Playing the Role of Government" points out: "Scientific macroeconomic regulation and effective government governance are inherent requirements for leveraging the institutional advantages of the socialist market economy." "Deeply Understanding the New Development Philosophy and Advancing Supply-Side Structural Reform" states: "The supply side and the demand side are the two basic means of managing and regulating the macroeconomy." "Sticking to and Continuously Enriching and Developing Xi Jinping Thought on Economy for the New Era" notes: "We must persist in refining macroeconomic regulation to adapt to changes in the principal contradiction [1] of our country's economic development." These important discourses provide a vital framework (遵循) for achieving scientific macroeconomic regulation. Deeply grasping the profound theoretical foundations, academic cultivation, and practical background contained within these discourses will help us more consciously and resolutely implement the decisions and deployments of the Party Central Committee, and manage the economy better with full confidence.
Building a Firm Theoretical Foundation in Marxist Political Economy for Analyzing the Contradictory Movements of Supply and Demand
General Secretary Xi Jinping’s important discourses on striving for a new dynamic equilibrium in the supply-demand relationship are grounded in Marxist political economy; they represent an enrichment and development of Marxist political economy and a modern transcendence based on the critical absorption of traditional Western economic analyses of aggregate supply and demand.
Viewed from the history of economic thought, categories such as supply, demand, microeconomics, and macroeconomics all originate from Western economics. Western economic analysis of aggregate supply and demand has two deep-seated traditions: first, in the theory of the source of value, it is based on the utility theory of value; second, in terms of economic philosophy, it follows the tradition of economic liberalism. Based on these, Western economics provides an economic interpretation of the justice of capital, the rationality of the capitalist mode of production, and the effectiveness of the capitalist market economic system.
The origins of supply and demand theory can be traced back to the 18th-century classical economic discussions on the source of value. During the era of classical economics, two schools of thought formed regarding the source of value: the "labor theory of value" and the "factor theory of value." For nearly a century thereafter, the labor theory of value held a mainstream position. Later, as classical labor theory of value disintegrated, the factor theory of value gradually became dominant. The factor theory of value originates from the "Smithian Dogma" of classical economics; while Adam Smith proposed the labor theory of value, he also proposed the theory of income-determined value, attributing the source of value to wages, interest, and rent, derived respectively from the three factors of labor, capital, and land. This theory of value is also called the "objective utility theory of value," which later evolved into supply theory—the basis of the "supply curve." In the mid-to-late 19th century, to explain the lack of effective demand appearing in capitalist economies, the subjective utility theory of value emerged. It held that the source of value is a person’s subjective evaluation of a commodity's utility. This gradually developed into the marginal utility theory of value (the Marginal Revolution), which posits that value is determined by subjective evaluations and is subject to the law of diminishing marginal utility. The marginal utility theory of value was later developed into demand theory—the basis of the "demand curve." At the turn of the 20th century, neoclassical economics synthesized supply and demand theory, forming a new analytical system of supply-demand equilibrium. It attributed the determination of value to the equilibrium of supply and demand—the "equilibrium price"—and replaced the theory of value with the theory of equilibrium price. Supply-demand analysis thus became the primary method for studying economic issues. However, the equilibrium analysis of neoclassical economics was still only partial equilibrium; it was not yet the aggregate supply and demand analysis used in modern macroeconomics, as the distinction between macro and micro did not yet exist.
From classical to neoclassical economics, the theoretical foundation upon which the categories and methods of supply and demand analysis rested was the utility theory of value (including both objective and subjective utility), rather than the labor theory of value. Regulation based on this analysis tended toward the supply side, believing that supply could automatically create demand—that supply-created demand is endogenous—or that the principal aspect of the supply-demand contradiction lies on the supply side, and that equilibrium between the two is self-consistent.
Macroeconomics emerged after the "Keynesian Revolution," based on the facts of the Great Depression in the 1930s. Keynesian economics, starting from a deficiency in effective demand, emphasized demand analysis. It argued that under fixed price conditions, supply could expand infinitely; as long as aggregate demand expanded, supply could fully and automatically satisfy demand. Overcoming the deficiency in effective demand became key to handling the supply-demand contradiction. While Keynesian theory could explain high unemployment during the Great Depression, it could not explain high inflation. Since the 1980s, a new generation of Keynesian economists developed original Keynesian theory into "aggregate demand theory" and transformed the original "Phillips Curve" into "aggregate supply theory," thereby forming the "AS-AD model." This theoretical model integrated demand management, supply management, and price management into a policy system to explain and govern the "stagflation" that appeared in the 1970s.
It can be said that from Keynesian theory to subsequent developments, the important theoretical foundation of Western macroeconomic analysis has always been the utility theory of value, and it remains an aggregate supply-demand analysis built on the foundation of diminishing marginal utility.
General Secretary Xi Jinping’s important discourses on striving for a new dynamic equilibrium in the supply-demand relationship are essentially different from the supply-demand analysis of Western economics. They are not based on the idealist utility theory of value or factor theory of value—which are fundamentally opposed to the labor theory of value—but rather adhere to the basic positions and methods of Marxist political economy. Building on the labor theory of value from classical economics, Marxist political economy created a scientific labor theory of value, attributing the sole source of value to human labor. By critiquing the "Smithian Dogma" and the utility theory of value, Marx revealed the differing statuses and roles of capital and labor under capitalist wage labor from the perspective of the source of value. This laid the foundation for the theory of surplus value, which in turn explained the institutional roots of the profound conflicts between aggregate supply and aggregate demand in a capitalist economy that lead to periodic economic crises. It demonstrated that the fundamental reason for the deficiency of effective demand in a capitalist economy lies in the antagonism between capital and labor, rather than the diminishing marginal utility formed on the basis of the utility theory of value. On this basis, Marx absorbed the essence of François Quesnay’s Tableau économique [2] for analyzing reproduction, dissected the production process of capitalist surplus value, explained the internal connections between various links and aspects of the reproduction and circulation of total social capital, and clarified the conditions required for the realization of social capital reproduction. This opened a path for scientific analysis of national economic aggregates.
In Xi Jinping Thought on Economy, the adherence to and development of Marxism resides most importantly in upholding the basic position and historical outlook of Marxist political economy.
On one hand, regarding the theoretical foundation—and in contrast to the utility and factor theories of value of the bourgeoisie—the "aggregate supply" argued here is not based on a supply curve derived from objective utility value, nor is the "aggregate demand" based on a demand curve originating from subjective utility value.
In Xi Jinping Thought on Economy, the indispensable role of productive factors (including labor power, instruments of labor, and subjects of labor) for national economic development and the growth of national wealth under the conditions of a socialist market economy is recognized. However, this role is attributed to the natural form of production—that is, categorized under productive forces. When discussing the category of "new quality productive forces," General Secretary Xi Jinping pointed out that new quality productive forces "take the leap in workers, instruments of labor, subjects of labor, and their optimal combination as their basic connotation, and a substantial increase in total factor productivity as their core hallmark." Clearly, here various productive factors are treated within the category of productive forces, and total factor productivity is treated as the efficiency of producing specific material wealth, not the efficiency of creating value. Although wealth can have a price and are reflected in market economies as aggregates measured by price, price determination is not equivalent to value determination. Productive forces are, in the final analysis, the ability of workers to use instruments of labor to act upon subjects of labor to create products and wealth. Products and wealth belong first to the category of use-value rather than value; use-value is the result of concrete labor rather than the crystallization of abstract labor. Productive forces reflect the relationship between man and nature, whereas the category of value is a social relationship; one cannot equate wealth with value. Products and wealth, as use-values, are the result of the joint action of various productive factors, but value, as a social relationship between people, can only have human labor as its sole source. Therefore, the productive factors and total factor productivity mentioned by General Secretary Xi Jinping are fundamentally different from the factor theory of value and utility theory of value found in Western economics.
On the other hand, regarding the historical outlook, Marxist political economy—on the basis of the labor theory of value—treats the reproduction and circulation of total social capital as a process of movement through the links of capitalist production, distribution, exchange, and consumption. It not only reveals the internal contradictions of supply-demand relations under capitalist economic conditions through value theory, but also reveals the fundamental conflict between capitalist private ownership and the socialization of production through the theory of surplus value. It further points out the historical trend of the contradictory movement between productive forces and relations of production driving social and economic development, fundamentally negating the capitalist mode of production. When Western economics performs supply-demand analysis, despite differences in theoretical methods and policy prescriptions, its fundamental position and objective are consistent: they all believe that the cause of supply-demand imbalance under the capitalist mode of production is market failure, that the purpose of macroeconomic regulation is to repair the market, and that the capitalist system is fully capable of effectively repairing market failure through macroeconomic policy. Their starting point is the theoretical premise that capitalist markets can achieve effective resource allocation, and their theoretical foundation is the recognition that the capitalist economic system possesses the possibility of driving the economy toward equilibrium.
General Secretary Xi Jinping’s important discourses on striving for a new dynamic equilibrium in the supply-demand relationship take the socialist market economy as their premise and adhere to a people-centered development philosophy. He emphasizes that "development for the people is the fundamental position of Marxist political economy," while also noting that "at no time can we forget that in deploying economic work, formulating economic policies, and promoting economic development, we must firmly adhere to this fundamental position." The root of capitalist economic crisis is, in the final analysis, the fundamental antagonism between the interests of capital and the interests of the broad masses formed in the process of surplus value production, which leads to a sharp contrast between the accumulation of capital and the intensification of poverty. Under the conditions of a socialist market economy, the basic socialist economic system objectively requires and is able to guarantee adherence to a people-centered development philosophy, thereby providing the institutional possibility for fundamentally overcoming supply-demand imbalances. Relying on the broad masses of the people to drive development and allowing the broad masses to share the dividends of development not only reflects the historical progress and fairness of the socialist market economy but also fundamentally enhances the efficiency of resource allocation. This makes the coordination of aggregate supply and aggregate demand institutionally possible, expanding effective demand while continuously liberating and developing productive forces and raising supply levels, thus sustaining the momentum of economic development.
Scientifically Understanding the Internal Connection between the Unity of Opposites in Aggregate Supply and Aggregate Demand
Aggregate supply and aggregate demand are a unity of opposites; they are two different aspects of the Gross National Product (GNP). The so-called equilibrium GNP actually refers to the GNP under conditions where aggregate supply equals aggregate demand. As General Secretary Xi Jinping has pointed out: "Supply and demand are two basic aspects of the internal relations of a market economy; they are a dialectical relationship of the unity of opposites. One cannot exist without the other; they are interdependent and serve as each other's conditions."
In terms of quantitative determinates, although total supply and total demand are two different aspects of Gross National Product (GNP), their connotations and determining factors differ. Total supply refers to the sum of total output that a national economy can provide for final consumption and investment over a certain period (usually one year), which can be expressed as the sum of labor remuneration and surplus; total demand refers to the sum of investment and consumption purchasing expenditures formed by a national economy over a certain period (usually one year). The scale and structure of both are influenced by different complex factors. From the perspective of national economic accounting, to make the two equal requires satisfying extremely complex conditions within the interconnected movements of national income, balance sheets, input-output, flow of funds, and international payments. Therefore, achieving perfect equilibrium is extremely difficult and lacks practical reality in economic practice.
Precisely because the connotations and determining factors of total supply and total demand differ, the policy characteristics of supply management and demand management also differ. In terms of the objects they target, supply management more directly affects producers (enterprises and industries) in a market economy, while demand management more directly affects consumers. Correspondingly, there are systematic differences in policy characteristics. As General Secretary Xi Jinping has pointed out: "The focus of demand-side management is on solving aggregate problems, emphasizing short-term regulation. It primarily stimulates or suppresses demand through the adjustment of taxes, fiscal expenditures, and monetary credit to drive economic growth. The focus of supply-side management is on solving structural problems, emphasizing the stimulation of drivers for economic growth. It primarily improves the quality and efficiency of the supply system through optimizing factor allocation and adjusting production structures to drive economic growth."
That is to say, both total supply and total demand are manifestations of GNP, but in different dimensions; supply management and demand management are both aimed at driving economic growth, but are realized through different methods. When coordinating the relationship between total supply and total demand, one cannot sever the two, nor treat one side merely as a premise while ignoring their active interplay and internal connections. In the history of Western economic thought, for a long period beginning with classical economics, the general emphasis was on supply analysis, while the demand side was usually treated as a given premise. In other words, the primary problem of economic growth was not on the demand side; so long as supply could expand, a supply-demand equilibrium would form automatically. Supply determined demand, and thus neither demand management nor government intervention was required, as the market—acting as an "invisible hand"—could achieve efficient resource allocation. Following the Great Depression, Keynesian economics and its subsequent developments started from the fundamental fact of insufficient effective demand. Using "demand determines supply" as its logical starting point, it emphasized demand management as the primary focus, advocating for the introduction of systematic macroeconomic policies to mitigate market failure, offset insufficient effective demand, and promote balanced economic growth. Clearly, in their analytical methods, both approaches ignored the internal connections between supply and demand or even severed the two, and thus both possess limitations.
The analysis of Marxist political economy, however, is grounded in the unity of supply and demand. Starting from the analysis of the reproduction and circulation of total social capital [3], it examines the internal connections within every link and aspect of the reproduction of total social capital. Proceeding from the normality of relative overproduction and insufficient effective demand in capitalism, it provides a deep analysis of the internal contradictions of the capitalist mode of production from the supply side, thereby revealing the institutional roots of insufficient effective demand. Under the conditions of a socialist market economy, the movement of the relationship between total supply and total demand has its own characteristics. Consequently, grasping the laws of this movement requires an analysis conducted from their organic unity. Especially under developmental conditions where supply cannot automatically create demand and demand finds it difficult to naturally drive supply, it is all the more necessary to grasp the laws through the contradictory movement of the unity of opposites between the two.
As General Secretary Xi Jinping has pointed out: "It is one-sided to discuss the supply side while abandoning the demand side, or vice versa. The two are not in a zero-sum relationship of substitution where one exists and the other does not; rather, they must complement each other and advance in coordination." Therefore, while Western economics has a tradition of severing supply and demand analysis, General Secretary Xi Jinping’s important discourse on striving to achieve a new dynamic equilibrium in the supply-demand relationship is fundamentally different. It follows the analytical method of Marx’s reproduction of total social capital, consistently analyzing the supply-demand relationship of the socialist market economy as a unified whole.
In terms of qualitative determinates, the dynamic equilibrium of total supply and total demand must be built upon the continuous improvement of the quality of both sides. In the history of economic thought, Western economics not only has a tradition of separating supply and demand, but also typically assumes that the quality of supply and demand themselves does not change, discussing quantitative equilibrium under conditions of constant quality. The so-called "aggregate supply-demand (AS-AD) models" that emerged since the 1980s, while focusing on the combination of supply and demand analysis, similarly assume that the quality of supply and demand remains unchanged. This prevents the analysis of the supply-demand relationship from truly reflecting the reality of economic development. Marx’s analysis of the reproduction and circulation of total social capital also assumed that technology and corresponding labor productivity remained constant, so that the ratio between constant capital and variable capital, as well as the proportion between the two departments (means of production and means of consumption), remained stable. This was an abstraction used for analytical methodology. While such an assumption of constant quality might hold under conditions where technological innovation and industrial revolution are slow, in an era where the scientific-technological and industrial revolutions are accelerating and deepening, one must fully consider the changes brought by these revolutions and their impact on the supply-demand relationship. That is, one must consider the qualitative changes in supply and demand themselves, grasping the evolutionary characteristics of their relationship through the unity of quality and quantity. As General Secretary Xi Jinping has emphasized, ensuring the unhindered flow of the economic cycle "depends mainly on whether both the supply and demand sides have strong momentum, are overall matched, achieve dynamic balance, and maintain benign interaction. This requires the organic integration of the strategy to expand domestic demand with the deepening of supply-side structural reform. Both sides should exert force simultaneously and coordinate with each other to form a higher-level dynamic balance where demand pulls supply and supply creates demand, realizing a benign cycle of the national economy."
In other words, high-quality supply should correspond to high-quality demand, improving the adaptability between supply and demand through the unity of quantity and quality. While both mainstream Western economics and Marx’s analysis of the realization conditions for the reproduction of total social capital examine the supply-demand relationship from the perspective of quantitative proportions—and both assume technology (the quality of both sides) remains constant in the short term—a prominent feature of General Secretary Xi Jinping’s important discourse on striving to realize a new dynamic equilibrium is the simultaneous emphasis on quantitative equilibrium and qualitative improvement of supply and demand.
The key to high-quality supply lies in cultivating new quality productive forces and accelerating the construction of a modernized economic system, particularly a modernized industrial system. The prominent features of high-quality supply are high technology, high efficiency, and high quality; innovation plays the leading role, and total factor productivity is significantly increased. The essence of high-quality demand is demand that adapts to the change in the principal contradiction of our society [4] and tangibly reflects people’s aspirations for a better life; it is effective demand realized through the socialist market economy system. The characteristics of high-quality demand are: consumption demand with potential and investment demand with returns. At the macro level, high-quality economic development means using high-quality demand to pull and guide high-quality supply, while using high-quality supply to adapt to and create high-quality demand. Otherwise, demand that is mid-to-low-end, low-quality, and low-priced can only stimulate supply that is low-efficiency, low-quality, and low-competitiveness. A major cause of the 2008 international financial crisis was that low-quality demand (such as U.S. "subprime mortgages") long drove a massive amount of low-efficiency supply (such as capacity formed under zero interest rates), resulting in severe economic bubbles. Likewise, low-quality supply can only satisfy low-quality demand; when supply itself struggles to adapt to new changes in demand in terms of quality, efficiency, and structural state, it becomes difficult to form a higher-level dynamic balance, and low-quality supply may even suppress demand or generate "demand spillovers." The unity of quality and quantity is an objective requirement for balanced economic development. As General Secretary Xi Jinping emphasized at the 2024 Central Economic Work Conference when summarizing the deepening understanding of the laws of economic work: we must coordinate the relationship between improving quality and expanding the total volume, adhering to the unity of winning through quality and exerting the scale effect.
Following the laws of terminal supply-demand movement and dynamically adjusting macroeconomic regulation based on changes in the primary aspect of the contradiction
The relationship between supply and demand is in constant motion. In this process, the characteristics of the contradiction and its primary aspect change continuously. A key feature of General Secretary Xi Jinping’s important discourse on striving to realize a new dynamic equilibrium in the supply-demand relationship is the emphasis on practice-based dynamism.
General Secretary Xi Jinping noted: "Throughout the history of world economic development, whether economic policy focuses on the supply side or the demand side must be decided based on a country’s macroeconomic situation." Targeting the practice of China's economic development in the New Era, General Secretary Xi Jinping further emphasized the timeliness of this dynamism, stating: "Macroeconomic regulation must adapt to the characteristics of the developmental stage and changes in the economic situation. When demand should be expanded, expand it; when supply should be adjusted, adjust it. Act with discretion and prescribe the right medicine."
Since the beginning of the New Era, China’s economic development has entered a New Normal [5], and profound changes have occurred on both the supply and demand sides. General Secretary Xi Jinping pointed out the characteristics of these changes: "On the demand side, the marginal effect of total stimulus policies is clearly diminishing; on the supply side, we must both comprehensively resolve overcapacity and explore the direction of future industries by allowing the market mechanism to play its role. We must fully grasp the new changes in the total supply-demand relationship and conduct macroeconomic regulation scientifically." Since the Reform and Opening-up, the primary contradiction and its primary aspect in China's aggregate economic imbalance were long concentrated on the demand side. Accordingly, macroeconomic regulation focused on demand management, either moderately tightening total demand or stimulating it with the goal of expanding domestic demand. For example, after the 1998 Asian financial crisis, China implemented a proactive fiscal policy and a prudent [6] monetary policy; after the 2008 international financial crisis, China decisively implemented a proactive fiscal policy and a moderately easy monetary policy; in 2010, it returned to a proactive fiscal policy and a prudent monetary policy. Although the direction and intensity of these policies varied, they were all based primarily on demand management.
After the 18th National Congress of the CPC, General Secretary Xi Jinping, based on an analysis of the characteristics of the New Normal, pointed out: "Currently and for a period to come, the problems facing China’s economic development exist on both the supply and demand sides, but the primary aspect of the contradiction is on the supply side." At the 2015 Central Economic Work Conference, General Secretary Xi Jinping further noted that promoting supply-side structural reform is a major innovation to adapt to and lead the New Normal of economic development, a proactive choice to adapt to the new situation of competition in comprehensive national strength following the international financial crisis, and an inevitable requirement of the New Normal. During the 38th collective study session of the Political Bureau of the 18th CPC Central Committee, General Secretary Xi Jinping required that "we must make improving the supply-side structure the main direction of attack, starting from the production end to improve the quality and efficiency of the supply system, expand effective and mid-to-high-end supply, and enhance the adaptability of the supply-side structure to changes in demand."
In the history of economic thought and development, Western economics produced the "Supply-side School." During the economic practices of the United States and the United Kingdom in the 1980s, a so-called "Supply Revolution" was attempted. The Western Supply-side School started from the premise that supply creates demand, highlighting the role of supply management. It argued that the primary cause of supply-demand imbalance and problems like "stagflation" lay on the supply side, not the demand side. Therefore, macroeconomic regulation should target the supply side, using fiscal and monetary policies (such as tax and interest rate cuts) to directly influence producer behavior, lower corporate costs, increase profits, and promote technological innovation and industrial upgrading. This was intended to shift the aggregate supply curve and form a new equilibrium between total supply and demand—the so-called "Laffer Curve." However, in practice, the "Supply Revolution" was not successful. The main reason was the systemic conflict between supply management policies and the theoretical economic philosophy and logical methods, as well as the practical capitalist economic systems and structures.
General Secretary Xi Jinping has profoundly explained the theoretical and practical differences between China’s supply-side structural reform and that of the West.
From the perspective of economic philosophy, China’s supply-side structural reform is not based on economic liberalism. As General Secretary Xi Jinping has pointed out: "The supply-side structural reform we speak of is not the same thing as the supply-side school of Western economics; we cannot view supply-side structural reform as a carbon copy of the Western supply-side school, and we must especially prevent some people from using their interpretations to promote 'neoliberalism.'" [7]
From the perspective of the institutional and systemic conditions for policy implementation, China's supply-side structural reform does not one-sidedly emphasize the sufficiency and effectiveness of market competition. Rather, it emphasizes advancing supply-side structural reform under institutional conditions where an effective market and a promising government [8] are unified. As General Secretary Xi Jinping has noted, the supply-side structural reform we speak of emphasizes both supply and pays attention to demand; it both highlights the development of social productive forces and focuses on perfecting the relations of production; and it both gives play to the decisive role of the market in resource allocation and better exerts the role of the government.
In terms of methodological logic, China's supply-side structural reform differs from the tradition inherited by the supply-side school, which separates the analysis of supply and demand. General Secretary Xi Jinping pointed out that the "method of thought of the supply-side school is relatively absolute, focusing only on supply while neglecting demand, and focusing only on market functions while neglecting the role of government." At the same time, their policy instruments are relatively singular, excessively highlighting the role of tax rates. China's promotion of supply-side structural reform emphasizes systematicity, stressing both supply and demand, and requiring that "to advance supply-side structural reform, we must make good use of the important tool of demand-side management, so that supply-side reform and demand-side management complement and reinforce each other, providing a favorable environment and conditions for supply-side structural reform."
At the same time, the policy instruments of China's supply-side structural reform are richer. In "Deeply Understanding the New Development Philosophy and Advancing Supply-side Structural Reform," General Secretary Xi Jinping pointed out: "This is not just a question of taxes and tax rates, but rather solving the problems existing on the supply side of our economy through a series of policy initiatives, particularly policy measures that promote scientific and technological innovation, develop the real economy, and guarantee and improve the people's livelihood." In particular, he emphasized using the methods of reform to advance structural adjustment. Centered on the main line of deepening supply-side structural reform, China has implemented "Three Deletions, One Reduction, and One Supplement" [9] and implemented the eight-character policy of "Consolidate, Strengthen, Improve, and Smooth," [10] promoting the implementation of a series of reform measures that have achieved remarkable results.
In recent years, especially following the outbreak of the COVID-19 pandemic, the global economic recession has intensified. China’s economy has faced multiple pressures, such as shrinking demand, supply shocks, and weakening expectations [11], and the contradictory movement between total supply and total demand has begun to undergo new changes. In 2020, General Secretary Xi Jinping proposed the construction of a new development pattern with dual circulation as the mainstay, requiring us to hold fast to the main line of supply-side structural reform while focusing on demand-side management. He proposed the firm implementation of the strategy of expanding domestic demand, taking the expansion of domestic demand as a strategic pivot. The report to the 20th National Congress of the CPC explicitly required the organic integration of the strategy of expanding domestic demand with the deepening of supply-side structural reform. The synergistic exertion of effort from both the supply and demand ends has become a prominent feature of China's macro-control in recent years. In summarizing the deepening of the regular understanding of economic work at the 2024 Central Economic Work Conference, General Secretary Xi Jinping noted an important principle: "We must coordinate the relationship between total supply and total demand and smooth the circulation of the national economy."
Currently, China's economy is facing many difficulties, including intensifying two-way shocks to supply and demand and the superposition of domestic and international risks. Macro-policy has shifted toward a more proactive fiscal policy and a moderately loose monetary policy, thereby simultaneously offsetting supply and demand shocks through macroeconomic policy. The mode of macro-control has changed accordingly, emphasizing the persistence of synergistic effort and dynamic balance on both the supply and demand sides. It places a more prominent position on vigorously boosting consumption, improving investment efficiency, and expanding domestic demand in an all-round way, while simultaneously continuing to deepen supply-side structural reform. It should be said that this follows General Secretary Xi Jinping's important discourse on striving to achieve a new dynamic equilibrium in the relationship between supply and demand. It represents a new adjustment in the relationship between supply management and demand management in macroeconomic governance based on the new changes in China's macroeconomy, particularly the new characteristics appearing in the contradictory movement of total supply and total demand. This is an objective requirement for achieving the unification of short-term and long-term goals for China's economic development, the unification of effective improvement in quality and reasonable growth in quantity, and the realization of high-quality development.
Since the dawn of the New Era, in the face of various difficulties and challenges, the operation of China’s economy has maintained overall stability and progress. Economic development has achieved historical accomplishments and undergone historical changes, powerfully proving the power of truth and the practical might of Xi Jinping Thought on Economy. On the road ahead, by adhering to the guidance of Xi Jinping Thought on Economy, further comprehensively deepening reform, pooling strength, and forging ahead with enterprise, China's economy will surely be able to sail steadily and reach far amidst turbulent waves. This will lay a solid foundation for comprehensively advancing the great cause of building a strong country and national rejuvenation through Chinese-path modernization.