Expand Domestic Demand Through Mutual Promotion of Consumption and Investment

The 2024 Central Economic Work Conference[1]1 The Central Economic Work Conference is an annual high-level meeting of the Communist Party of China that sets economic policy guidelines for the following year. The 2024 conference was held in December 2024. pointed out that “China’s economic foundation is stable, its advantages are many, its resilience is strong, and its potential is great, and the supporting conditions and basic trends for long-term improvement have not changed,” and listed “vigorously boosting consumption, improving investment returns, and expanding domestic demand in all respects” as the first of the nine key tasks to be accomplished in 2025. Consumption, investment, and exports are the “three carriages”[2]2 A common Chinese metaphor for the three main drivers of economic growth: consumption, investment, and exports. that drive economic growth, of which consumption and investment fall under domestic demand and exports under external demand. In the first three quarters of 2024, the economy grew by 4.8%, with the contribution of final consumption expenditure, gross capital formation, and net exports of goods and services to GDP being 2.4, 1.26, and 1.14 percentage points respectively. It can be seen that domestic demand is the basic driver of China’s economic development. From the perspective of the relationship between consumption and investment, potential consumption and efficient investment have never been separate but rather complement and support each other. On the demand side, the industrial upgrading on the supply side brought about by consumption upgrading generates new investment demand; on the supply side, effective investment can not only satisfy high-quality consumption demand but also further lead and create new consumption demand. When consumption expands or investment grows, consumption and investment, through their mutual interaction, promote further expansion of investment and consumption, forming a virtuous cycle of mutual promotion between investment and consumption. To address the current problems of insufficient domestic demand, it is necessary to start from vigorously boosting consumption, improving investment returns, and forming a mutual promotion between potential consumption and efficient investment, thereby accelerating the formation of a powerful combined force for expanding domestic demand.

2024年中央经济工作会议指出“我国经济基础稳、优势多、韧性强、潜能大，长期向好的支撑条件和基本趋势没有变”，并将“大力提振消费、提高投资效益，全方位扩大国内需求”列为2025年需要抓好的九大重点任务之首。消费、投资、出口是拉动经济增长的“三驾马车”，其中消费和投资属于内需，出口属于外需。2024年前三季度经济增长4.8%，最终消费支出、资本形成总额、货物和服务净出口对GDP的拉动分别为2.4%、1.26%、1.14%。可以看出，内需是中国经济发展的基本动力。从消费与投资的关系看，有潜力的消费和有效益的投资从来都不是割裂的，而是相辅相成、相互支撑。在需求端，消费升级带来的供给端产业升级，会产生新的投资需求；在供给端，有效投资不仅可以满足高质量的消费需求，还将进一步引领和创造新的消费需求。当消费扩大或投资增长时，消费和投资会通过彼此之间的相互作用推动投资和消费的进一步扩大，形成投资和消费相互促进的良性循环。当前应对国内需求不足等问题，需要从大力提振消费、提高投资收益、形成有潜力消费与有效益投资相互促进等方面着手，加快形成促进内需扩大的强大合力。

Vigorously boost consumption, establish long-term mechanisms conducive to expanding residents’ consumption

大力提振消费，建立有利于扩大居民消费的长效机制

The share of final consumption expenditure in GDP in developed countries is generally around 80%. In 2023, the share of final consumption of residents in China’s GDP was 56%, leaving broad room for future increase. Vigorously boosting consumption requires establishing long-term mechanisms conducive to expanding residents’ consumption.

发达国家的最终消费支出占GDP的比重一般在80%左右。2023年，我国居民最终消费占GDP的比重为56%，未来提升空间广阔。大力提振消费，需要建立起有利于扩大居民消费的长效机制。

Promote income increases and burden reduction for low- and middle-income groups to enhance residents’ consumption capacity. On the one hand, further improve the reform of the factor distribution system to increase residents’ wage income and property income; on the other hand, deepen the reform of the individual income tax system to further expand the scope and intensity of tax deduction items. In addition, continue to increase the combined policy effect of consumption vouchers to further stimulate the vitality of the consumer market.

推动中低收入群体增收减负，提升居民消费能力。一方面，进一步完善要素分配制度改革，增加居民工资性收入和财产性收入；另一方面，深化个税体制改革，进一步扩大个税抵扣的项目范围和力度。此外，持续加大消费券的政策组合效果，进一步激发消费市场活力。

Adopt multiple measures to unearth consumption potential and strive to raise the level of residents’ consumption. From the perspective of the consumption structure, the low share of final consumption expenditure of Chinese residents in GDP is mainly reflected in insufficient service consumption. To this end, we should innovate diversified consumption scenarios, strive to expand service consumption, continue to deepen reforms in education, elderly care, medical care, health and other fields, and further improve the quality of service consumption. Vigorously develop the first-store economy[3]3 Economic activity centered around the opening of first stores or flagship stores by brands, often in new locations, to attract consumers and stimulate local consumption., the ice-and-snow economy[4]4 Economic activities related to winter sports, ice-and-snow tourism, and related industries., and the silver economy[5]5 Economic activities and industries that cater to the needs of the elderly population, such as healthcare, eldercare, and pension products., promote the development of cultural tourism, provide residents with richer consumption scenarios, and raise the level of residents’ consumption.

多措并举挖掘消费潜力，着力提升居民消费层级。从消费结构看，中国居民最终消费支出占GDP的比重偏低主要体现为服务消费不足。为此，应创新多元化消费场景，努力扩大服务消费，持续深化教育、养老、医疗、健康等领域改革，进一步提高服务消费的品质。大力发展首发经济、冰雪经济、银发经济，促进文化旅游业发展，为居民提供更丰富的消费场景，提升居民消费层级。

Continuously optimize the consumption environment to further enhance consumption willingness. A good consumption environment can boost consumption confidence and increase consumption willingness. To this end, we should continue to promote the formulation and revision of national and relevant industry standards in the field of people’s livelihood consumption, especially in key areas of service consumption such as accommodation, catering, and domestic services, and continuously improve the quality of residents’ consumption. Guide enterprises to operate in good faith and compliance, give play to the important role of government regulation in standardizing market order, strengthen interdepartmental coordination, strictly crack down on false propaganda, price fraud, unfair clauses and other malpractices, and create a consumption environment that reassures the public. Establish a rapid dispute resolution mechanism to respond to reasonable consumer demands in a timely and effective manner.

不断优化消费环境，进一步提升消费意愿。良好的消费环境可以提振消费信心、提升消费意愿。为此，应持续推进民生消费领域国家和相关行业标准的制订和修订工作，尤其是住宿、餐饮、家政等服务消费重点领域，不断提高居民消费质量。引导企业诚信合规经营，发挥政府监管在规范市场秩序方面的重要作用，加强部门联动，严厉打击虚假宣传、价格欺诈、霸王条款等乱象，打造让公众放心的消费环境。建立纠纷快速处理机制，及时有效回应消费者合理诉求。

Continue to deepen special consumption actions, intensify and expand the implementation of the “two new”[6]6 Short for “large-scale equipment renewal and replacing old consumer goods with new ones” (大规模设备更新和消费品以旧换新), a policy package to boost investment and consumption. policy. Since July 2024, 300 billion yuan in ultra-long-term special government bonds[7]7 Long-maturity special government bonds issued by the central government for specific policy objectives, such as supporting equipment upgrades and trade-in programs. have been used to strongly support large-scale equipment renewal and replacing old consumer goods with new ones, effectively accelerating the release of consumption potential. By making good use of central government financial support and ultra-long-term special government bond support funds, various localities have coordinated efforts to promote “energy change” for cars, “intelligence change” for home appliances, “renovation” for home furnishings and kitchen/bathroom items, and the replacement of old electric bicycles with new ones, achieving positive results in promoting consumption. Data from the Ministry of Commerce show that as of December 9, 2024, the total number of cars traded in for new ones nationwide exceeded 5 million.

持续深化消费专项行动，加力扩围实施“两新”政策。2024年7月以来，3000亿元超长期特别国债用于加力支持大规模设备更新和消费品以旧换新，有效推动了消费潜力的加速释放。各地通过用好中央财政和超长期特别国债支持资金，统筹推动汽车换“能”、家电换“智”、家装厨卫“焕新”以及电动自行车以旧换新，促消费取得积极成效。商务部数据显示，截至2024年12月9日，全国汽车以旧换新合计突破500万辆。

Improve investment returns, establish endogenous growth mechanisms for effective investment

提高投资效益，建立有效投资的内生增长机制

Improving investment returns is the clear orientation of this Central Economic Work Conference for the investment field, which means that reducing ineffective investment and low-efficiency investment and establishing endogenous growth mechanisms for effective investment will be the key tasks in the investment field in the future.

提高投资收益是此次中央经济工作会议对投资领域的清晰指向，这意味着减少无效投资和低效率投资，建立有效投资的内生增长机制，将是未来投资领域的重点工作。

Optimize the investment structure and focus on expanding effective investment. On the one hand, gradually eliminate investment projects in areas with excess capacity and redundant construction, and reduce the proportion of investment in these areas; on the other hand, focus on key core technologies, digital infrastructure, strategic emerging industries and other fields, and further increase investment efforts. In optimizing the investment structure, special attention should be paid to regional differences, and investment should be weighted according to the industrial advantages and development foundations of the eastern, central, and western regions.

优化投资结构，着力扩大有效投资。一方面，逐渐淘汰过剩产能和重复建设领域的投资项目，降低在这些领域的投资比重；另一方面，聚焦关键核心技术、数字基础设施、战略性新兴产业等领域，进一步加大投资力度。在投资结构的优化上应特别注意区域差异，根据东部、中部、西部的产业优势和发展基础，在投资上有所侧重。

Provide greater support for the “two priority”[8]8 Short for “implementation of major national strategies and the building of security capacity in key areas” (国家重大战略实施和重点领域安全能力建设), referring to projects that advance national priorities and security. projects and further expand investment and financing channels. Increase the issuance of ultra-long-term special government bonds for projects that advance the implementation of major national strategies and the building of security capacity in key areas. Make good use of the leveraging effect of government guidance funds on major projects, further attract various financial institutions and social capital to participate in major project construction, strengthen coordination between finance and fiscal policy, and establish a new mechanism for government-social capital investment and financing cooperation. Further enhance policy incentives to stimulate the vitality of private investment. Strengthen the implementation of policies and measures to promote private capital investment and financing, and increase the enthusiasm of private capital.

更大力度支持“两重”项目，进一步拓宽投融资渠道。在推进国家重大战略实施和重点领域安全能力建设的项目上，加大超长期特别国债的投放力度。用好政府引导资金在重大项目上的杠杆作用，进一步吸引各类金融机构、社会资本参与重大项目建设，加强财政与金融的配合，建立政府和社会资本投融资合作新机制。进一步增强政策激励，激发民间投资活力。强化落实促进民间资本投融资发展政策举措，提高民间资本的积极性。

Optimize the investment environment and maintain a fair market competition order. Simplify investment approval procedures, increase the efficiency of project approval, and effectively govern various malpractices in investment attraction. Use one-stop, full-chain service standards to solve problems in the enterprise investment process, reduce institutional transaction costs for enterprises, and create a fair and competitive investment market environment.

优化投资环境，维护公平的市场竞争秩序。简化投资审批流程，提高项目审批效率，有效治理招商引资中的各种乱象。以一站式、全链条的服务标准来解决企业投资过程中的问题，降低企业制度性交易成本，创造公平竞争的投资市场环境。

Precise alignment of supply and demand to achieve mutual promotion of consumption and investment

供需精准对接，实现消费和投资的良性互促

Consumption plays a foundational role in driving economic growth, and efficient investment plays a key role in it. Efficient investment can satisfy consumers’ higher-level consumption, while high-quality consumption is also an important force driving efficient investment. We should accelerate the formation of a situation where potential consumption and efficient investment promote each other. In the first three quarters of 2024, in terms of fixed asset investment, investment in high-tech industries increased by 10.0% year on year, of which investment in high-tech manufacturing and high-tech services increased by 9.4% and 11.4% respectively; in terms of residents’ consumption, consumption of basic necessities was relatively stable, while consumption of upgraded goods continued to improve, with retail sales of communication equipment and sporting and recreational goods increasing by 11.9% and 9.7% respectively. This indicates that a situation of mutual promotion between potential consumption and efficient investment is currently taking shape in China. To accelerate the formation of a virtuous cycle of mutual promotion between consumption and investment, it is necessary to establish a real-time dynamic adjustment mechanism for precise alignment of supply and demand.

消费对拉动经济增长具有基础性作用，有效益的投资在其中发挥关键性作用，有效益的投资可以满足消费者更高水平的消费，而高品质的消费也是带动有效益的投资的重要力量，应加快形成有潜能的消费与有效益的投资相互促进的局面。2024年前三季度，在固定资产投资方面，高技术产业投资同比增长10.0%，其中高技术制造业和高技术服务业投资分别增长9.4%、11.4%；在居民消费方面，基本生活类消费较为平稳，而升级类商品消费持续向好，其中通信器材类、体育娱乐用品类商品零售额分别增长11.9%、9.7%。这表明当前我国有潜能的消费和有效益的投资相互促进的局面正在形成。为加快形成消费和投资相互促进的良性循环，需要建立起供需精准对接的实时动态调整机制。

On the demand side, fully leverage the foundational role of consumption. At present, the trend of consumption upgrading is obvious, with digital consumption, service consumption, and green consumption constantly emerging, which have a positive impact on both the scale and structure of investment. From the terminal perspective of consumption, changes in consumption demand will incentivize investment entities to adjust production structures and change investment directions; the rapid changes in investment and financing market trends are precisely aimed at adapting to new consumption demands.

在需求侧，充分发挥消费的基础性作用。现阶段消费升级趋势明显，数字消费、服务消费和绿色消费等不断涌现，对投资规模和投资结构均产生积极影响。从消费的终端视角看，消费需求的变化会激励投资主体调整生产结构、改变投资方向，投融资市场风口的快速变化就是为了顺应新的消费需求。

On the supply side, further play the key role of effective investment. On the one hand, effective investment can promote the improvement and expansion of residents’ consumption. As residents’ quality of life continues to improve, only by promptly adjusting the supply structure of service products can we continuously meet higher-level service consumption demands; on the other hand, effective investment can lead and drive new service consumption. When investment brings higher-quality service products and a better consumption environment, it can effectively stimulate consumption potential and lead new consumption demands.

在供给侧，进一步发挥有效投资的关键性作用。一方面，有效投资可以促进居民消费提质扩容。随着居民生活质量不断提高，只有及时调整服务产品供给结构才能不断满足更高层次的服务消费需求；另一方面，有效投资可以引领和带动新的服务消费。当投资带来更优质的服务产品和更好的消费环境时，可以有效激发消费潜能，引领消费新需求。

Coordinate dynamic equilibrium between supply and demand and form a mutual promotion mechanism. Strive to resolve supply-demand contradictions, clear the blockages in the circulation cycle of consumption and investment, use potential consumption demand to drive efficient investment growth, and use efficient investment to drive high-quality consumption, continuously meet the people’s growing aspirations for a better life, and ultimately form a virtuous mutual promotion mechanism between consumption and investment.

协调供需动态均衡，形成互促机制。着力化解供需矛盾，疏通消费和投资循环流通中的堵点，以有潜力的消费需求拉动有效益的投资增长，并以有效益的投资带动高品质消费，不断满足人民群众对美好生活的向往，最终形成消费和投资的良性互促机制。

(Authors: Fang Honglin and Wang Pengfei, respectively a researcher at the Heilongjiang Provincial Academy of Social Sciences and an associate professor at Luoyang Normal University)

（作者：房宏琳 王鹏飞，分别系黑龙江省社会科学院研究员、洛阳师范学院副教授）

Online editor: Huihui

网络编辑：慧慧