General

In the government work report, "Striving to expand domestic demand" was listed as the top priority of this year's work. At present, seizing the window period of promoting the recovery of consumption and investment, from ministries and commissions to local governments, is accelerating the preparation and launch of a series of measures, combined with supply-side structural reform, to accelerate the release of domestic demand potential.

Comprehensive measures to expand domestic demand are brewing

Recently, ministries, commissions, and local governments have repeatedly released signals of efforts to expand domestic demand. The relevant person in charge of the National Development and Reform Commission previously stated that in 2023, China will expand domestic demand in five aspects: restoring and expanding consumption, and expanding effective investment. Increase the income of urban and rural residents through multiple channels, especially improving the consumption ability of low - and middle-income residents. Support consumption such as housing improvement and new energy vehicles, and cultivate new types of consumption such as online and offline integration. At the same time, we vigorously and orderly promoted the implementation of 102 major projects in the "14th Five Year Plan". Encourage and attract more private capital to participate in the construction of national major projects and complementary board projects.

The Ministry of Commerce has designated this year as the "Year of Boosting Consumption", and will consider introducing new measures while implementing existing policies. For example, guiding local governments to carry out new energy vehicle activities in the countryside; Promote the introduction of green smart home appliances to the countryside and the exchange of old for new, and promote household appliance consumption; Support the healthy development of new forms and models of consumption, stimulate consumption vitality, etc., Huacheng Import and Export Data Observation Report.

At the local level, many regions have taken expanding domestic demand as an important means of stabilizing the economy. For example, on March 22, Hubei Province issued the 2023 Provincial Work Plan for Stabilizing Expectations, Expanding Domestic Demand, and Promoting Consumption. The plan focuses on ten major actions such as enhancing confidence and stabilizing expectations, recovering and expanding consumption, and improving investment quality and efficiency, and proposes 33 specific tasks.

In addition, following the issuance of the "Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035)" by the Central Committee of the Communist Party of China and the State Council in December last year, and the issuance of the "Implementation Plan for Expanding Domestic Demand during the 14th Five Year Plan" by the National Development and Reform Commission, this year, local versions of the plan for expanding domestic demand have also been intensively released.

Recently, the website of the Shandong Development and Reform Commission released the "Three Year Action Plan for Expanding Domestic Demand in Shandong Province (2023-2025)" (draft for comments), which contains many quantitative indicators. For example, by 2025, the total retail sales of social consumer goods in the province will steadily increase, and the contribution rate of consumption to economic growth will reach about 60%; We will strive to expand effective investment, promote the transformation and upgrading of key traditional industries such as steel, chemical industry, and nonferrous metals, and implement about 10000 technical transformation projects with an investment of more than 5 million yuan each year.

According to Huacheng Import and Export Data Observation, Sichuan and Tianjin have previously issued local "14th Five Year Plan" plans or strategic implementation plans to expand domestic demand, combining local conditions and proposing specific measures and objectives. For example, focusing on improving traditional consumption, cultivating new types of consumption, and developing service consumption, further boosting consumption. Focusing on major projects, we will accelerate the construction of new types of infrastructure, complement weaknesses in key areas, and strive to expand effective investment. Release the potential of domestic demand in new urbanization.

Seize the Recovery Window and Activate Consumption

Investment and consumption are the "two wings" of expanding domestic demand. At present, restoring and expanding consumption is given priority.

"Restoring and expanding consumption should be the policy focus of expanding domestic demand." Wang Yiming, Vice Chairman of the China Center for International Economic Exchanges and former Deputy Director of the Development Research Center of the State Council, stated at the 2023 annual meeting of the China Development High Level Forum that since the strategy of expanding domestic demand was proposed in 1998, the policy focus has mostly been on expanding investment demand. As the space for expanding investment narrows and marginal efficiency decreases, expanding consumption is particularly important for sustained and stable economic growth. It is necessary to innovate policy tools for expanding consumption and improve the institutional mechanisms for expanding consumption.

According to the government work report, this year, it will stabilize mass consumption such as automobiles, and promote the recovery of consumption in catering, culture, tourism, sports, and other life services.

The reporter noted that relevant departments and local governments are promoting relevant measures to accelerate implementation and achieve remarkable results. Among them, automobiles, home appliances, household appliances, and catering, which are known as the "Four Kingdoms" in the consumption field, account for a quarter of consumption, and are the focus of restoring and expanding consumption. In addition, the recovery of some consumption affected by the epidemic, especially offline contact consumption, is also accelerating.

Various activities are being held around the country in combination with local characteristics and consumption scenarios, effectively promoting the recovery of offline consumption. For example, in Chengdu, themed marketing and promotional activities such as "weekend tours", "peripheral tours", and "cross provincial tours" are ongoing. A number of weekend boutique spots, weekend micro vacation demonstration products, and themed routes have been launched locally, accelerating the recovery of cultural and tourism consumption. According to Meituan data, since March, Chengdu has ranked fifth in tourism consumption transactions nationwide, demonstrating the resilience and vitality of consumption.

Deepen supply side reform to further unleash domestic demand potential

According to the Huacheng Import and Export Data Observation Report, in January and February, the total retail sales of consumer goods reached 7706.7 billion yuan, a year-on-year increase of 3.5%, with the growth rate turning from lower to higher; The national fixed assets investment (excluding farmers) was 5357.7 billion yuan, up 5.5% year on year, 0.4 percentage points faster than that in 2022.

Zhao Chenxin, Deputy Director of the National Development and Reform Commission, stated at the press conference of the National Development and Reform Office on March 6 that from the perspective of consumption, the consumer market has shown a good trend since the Spring Festival, creating a good start for the first quarter and even the entire year of consumption. From the perspective of investment, in the recent period, major projects around the country have been intensively started, and policies such as policy based development financial instruments, medium and long-term loans for the manufacturing industry, and equipment upgrading and transformation in key areas have effectively promoted "funds and factors follow the project", providing strong support for the economic recovery and improvement.

Experts propose that the next step is to intensify reform efforts, organically combine the implementation of the strategy of expanding domestic demand with deepening structural reform on the supply side, and further stimulate the potential of domestic demand.

"Reform is the key point for coordinating the expansion of domestic demand and supply-side structural reform." Liu Yuanchun, President of Shanghai University of Finance and Economics, said that a policy line should be found in short-term policies that combines consumption and investment, and the expansion of domestic demand with supply-side structural reform.

Zhang Liqun, a researcher at the Development Research Center of the State Council, said that it is crucial to focus on expanding domestic demand at present. We should concentrate on boosting investment, further strengthen infrastructure investment, comprehensively consider economic and social benefits, give play to the driving role of government investment in investment, and attract private capital to participate. Through investment, enterprise production continues to be active, supporting employment and income growth, providing an important driving force for expanding consumption. Boost consumption while promoting the upgrading of consumption structure and improving the consumption environment.

According to Huacheng Import and Export Data Observation, the deployment of a series of measures to promote investment, form more physical workload, accelerate the construction of a modern industrial system, and provide high-quality products and services to adapt, lead, and create new demand is accelerating.

The China Securities Regulatory Commission and the National Development and Reform Commission recently issued a notice giving priority to supporting urban and rural commercial network projects such as department stores, shopping centers, and farmers' markets, and issuing infrastructure REITs for community commercial projects that ensure basic livelihood. Industry insiders believe that starting from the supply side and formally incorporating consumer infrastructure into the distribution scope of REITs can help expand domestic demand and stabilize service growth.

Wang Yiming pointed out that it is necessary to seize the window period of accelerating economic recovery, effectively respond to market concerns, boost market confidence by addressing some key issues, and fully unleash the potential of domestic demand suppressed by the epidemic. Huacheng Import and Export Data Observation Report.