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Boosting consumption and investment crucial to recovery

China Daily | Updated: 2023-12-19 08:19

A woman selects vegetables at a supermarket in Huaihua city of Hunan province, Oct 13, 2023. [Photo/Xinhua]

The recently concluded Central Economic Work Conference pointed out that the country will focus on expanding domestic demand and effective investment, so that consumption and investment promote each other.

Insufficient domestic demand remains a big problem for the healthy development of China's economy. In order to unleash domestic demand, the country has introduced a slew of policy measures in recent years, achieving tangible results in restoring consumer confidence.

Statistics show that China's total retail sales of consumer goods reached 38.54 trillion yuan ($5.4 trillion) from January to October, an increase of 6.9 percent year-on-year, with the contribution rate of final consumption to economic growth reaching 83.2 percent in the first three quarters. At the same time, the total investment has continued to grow and the investment structure has been continuously optimized.

Domestic demand remains the driving force of China's economic development. It includes consumption demand and investment demand, and the country should neither excessively emphasize consumption while neglecting investment, nor should it put too much emphasis on investment while neglecting consumption. Only when consumption and investment are both boosted, can the sustained and steady growth of domestic demand be ensured to drive economic growth.

Consumption and investment have a certain degree of mutual substitution, but most of the time, are complementary. When investment provides consumers with more high-quality goods, more convenient logistics conditions and a more suitable consumption scenario it can stimulate consumption potential.

At the same time, increased consumption can lead to an increase in investment, which helps promote jobs, increase household incomes and provide a foundation for consumption in the time ahead.

The complementarity between consumption and investment has become increasingly obvious, which requires the country to pay more attention to the mutual promotion of consumption and investment.

While stabilizing traditional consumption areas, the country should also try to foster and strengthen new types of consumption, and improve the consumption environment, to fully unleash the consumption potential.

At the same time, it needs to make good use of the multiplier effect of government-led investment to improve the investment structure and raise investment efficiency and returns, to optimize the supply structure and upgrade the consumption structure through promoting positive interaction between investment and consumption, so as to improve the quality of domestic demand and inject impetus into high-quality development.


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