Wisdom Says 2024 (2).
Zhang Fei. **The Economic Work Conference emphasized that "we must adhere to the deepening of supply-side structural reform and focus on expanding effective demand to make concerted efforts, give full play to the advantages of super-large-scale market and strong production capacity, so that the domestic cycle is based on the main driving force of domestic demand, and improve the quality and level of international circulation" and "focus on expanding domestic demand". At present, in the context of the increasing complexity, severity and uncertainty of the external environment, the key to promoting the effective improvement of the quality of the economy and the reasonable growth of the quantity lies in releasing the huge domestic demand potential of the new urbanization.
The expansion of domestic demand has become the main driving force supporting economic growth.
By 2035, in order for China to basically achieve socialist modernization and reach the level of moderately developed countries in terms of per capita GDP, it is necessary to give full play to the outstanding advantages of the domestic super-large-scale market and strong production capacity, and fully release the domestic demand potential of 1.4 billion people, so as to support the average annual economic growth rate of 4%-5% in the next 10-15 years.
First, consumption has become the main driving force for economic growth. Consumption is not only the driving force of growth, but also the purpose of growth. In the past 10 years, consumption has become the "first driving force" for China's economic growth. Data show that from 2013 to 2021, the average annual contribution rate of China's final consumption expenditure to economic growth exceeded 50%, and in 2022, affected by the epidemic and other factors, the contribution rate of China's final consumption expenditure to economic growth will decline significantly. However, judging from the situation in 2023, the growth rate of China's total retail sales of consumer goods will continue to rise from August 2023, and the growth rate will reach 10 in November 20231%, the trend of consumption recovery is becoming more and more obvious. In the first three quarters of 2023, the contribution of final consumption expenditure to economic growth reached 832%, driving GDP growth by 44 percentage points, becoming the main driving force for economic growth. Judging from international experience, at present, the contribution rate of final consumption expenditure to economic growth in developed countries in Europe and the United States is generally 70%-80%. In other words, economic growth is supported by domestic demand, which is in line with the general law of the economy of a large country.
Second, the upgrading of consumption structure is in a critical period. China has entered a new stage of development, one of the important characteristics is the comprehensive and rapid growth of service-oriented consumer demand, and the trend of upgrading the consumption structure of urban and rural residents from material-based consumption to service-oriented consumption is becoming more and more obvious. According to statistics, from 2013 to 2019, the per capita service-oriented consumption expenditure of urban and rural residents accounted for 397% rose to 459%。Although affected by the epidemic in the past three years, it has fallen to 432%, but the trend of upgrading the consumption structure has not changed. In the first three quarters of 2023, the per capita service-oriented consumption expenditure of residents increased by 14 percent year-on-year2%, accounting for 46 percent of the per capita consumption expenditure of residents1%, an increase of 2 percentage points over the same period last year, and is in the stage of accelerated development of consumption structure upgrading. With the gradual recovery of consumption, it is estimated that the proportion of service-oriented consumption of Chinese residents is expected to reach more than 50% in the next five years.
Third, it is necessary to adapt to the trend of upgrading the consumption structure and expand investment. The growth of consumption and the upgrading of the structure can drive the growth of investment and the optimization of the industrial structure, thus forming a new pattern of service-oriented consumption leading investment. For example, China's aging population brings huge consumer demand for pension, medical care, housekeeping services and other aspects of the demand continues to grow, pension, medical and health services and other service-oriented consumer demand for rapid growth, will bring trillion-yuan market investment space. To this end, it is necessary to adapt to the trend of upgrading China's consumption structure, expand investment with service demand, and speed up the formation of a virtuous circle in which consumption and investment promote each other.
The new type of urbanization has huge potential for domestic demand.
An important support for expanding domestic demand is the new type of urbanization. Judging from the actual situation of China's urbanization process, the urbanization of the registered population lags behind the urbanization of the permanent population. In 2021, the urbanization rate of China's registered population was only 467%, which is 18 percentage points lower than the urbanization rate of permanent residents. This means that there is still a lot of room for improvement in China's urbanization.
First, urbanization is still in the stage of accelerated development. From the perspective of international experience, the urbanization rate of 30%-70% is generally considered to be the range of rapid urbanization development. In 2022, the urbanization rate of China's permanent population will be 6522%, which is still in the stage of accelerated urbanization. In the next 10 years, tens of millions of agricultural migrants will settle in cities and towns every year, which will become an important support for China's expansion of domestic demand.
Second, new urbanization drives consumption. Urbanization, accompanied by the rapid growth of middle-income groups, has formed an important carrier to promote consumption. In particular, China is in a critical period of upgrading the consumption structure, and urbanization not only drives the growth of consumption scale, but also promotes the upgrading of consumption structure. Studies have shown that for every farmer with a spouse and a child settling in the city, it can boost consumer spending by about 440,000 yuan. If nearly 100 million agricultural migrants settle down in cities and towns in the next 10 years, it will bring incremental consumer demand44 trillion yuan.
Third, new urbanization drives investment. Studies have shown that, under normal circumstances, every 1 percentage point increase in the urbanization rate will directly lead to an increase of 1 percentage point in per capita capital stock3%；After the urbanization rate reaches 60%, every 1 percentage point increase will directly lead to an increase in per capita capital stock to 35%, which is about twice as much as the urbanization rate of 50% to 60%. In other words, urbanization can significantly stimulate investment. For example, a large amount of surplus rural labor has moved to cities and towns, resulting in huge investments in housing, infrastructure, and so on. It is shown that every increase in the population of one city in China can drive an increase of 500,000 yuan in fixed asset investment. If 100 million new urban population is added in the next 10 years, the new urban fixed asset investment will reach 50 trillion yuan.
Promote the orderly convergence of the strategy of expanding domestic demand and the strategy of new urbanization.
The Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035) points out that "the strategy of expanding domestic demand and the strategy of new urbanization should be linked in an orderly manner, so that it will become an important driving force for economic development." "Objectively, the convergence point between the strategy of expanding domestic demand and the strategy of new urbanization lies in consumption, and it is necessary to release the consumption potential of the majority of residents with new urbanization.
First, it is necessary to speed up the establishment and improvement of a basic public service system that integrates urban and rural areas.
We will continue to deepen the reform of the household registration system and improve the unified residence permit system in urban and rural areasAccelerate the improvement of the basic public service supply mechanism for the urban permanent resident population with the residence permit as the carrier, increase investment in public services, accelerate the equalization of basic public services in urban and rural areas, and gradually narrow the gap between urban and rural public consumption, so that public consumption will become an important engine for the growth of residents' consumption.
Second, it is necessary to speed up the realization of the urbanization of the rural migrant population. In the next few years, if the huge group of migrant workers can be citizenized as soon as possible, it will not only effectively improve the quality of urbanization development, but also become an important force to promote the upgrading of consumption structure. To this end, it is necessary to accelerate the urbanization of the rural migrant population, and cover all the permanent residents who have not settled down in urban areas with basic public services, so that the rural migrant population can truly integrate into the cities and towns in the economic, cultural, and living fields.
Third, it is necessary to promote urban-rural integration and coordinated regional development, and promote the rational allocation of public resources. The key to improving the "popularity" of China's small and medium-sized cities and towns lies in enhancing the ability to absorb employment, the convenience of life, and the availability of high-quality public services. In the next few years, to form a new pattern of urban-rural integrated development, it is necessary to increase investment in public resources in small and medium-sized cities, realize the rationalization of the allocation of public resources in large, medium and small towns, and make the agricultural transfer population really willing to settle in small and medium-sized towns.
Fourth, it is necessary to speed up the cultivation of middle-income groups in the process of promoting urbanization. According to the estimation of relevant experts, in 2022, the size of China's middle-income group will reach 4About 600 million people, accounting for one-third. From the perspective of international experience, urbanization is accompanied by the rapid increase of middle-income groups in the accelerated development of urbanization, especially in the accelerated development of urbanization. Studies have shown that every 1 percentage point increase in the proportion of middle-income groups in China will increase consumer spending by about 1 trillion yuan. In the next 10 years, if the proportion of China's middle-income group can reach more than 50%, it will effectively release the consumption potential. To this end, it is necessary to speed up the reform of the income distribution system in the process of urbanization, cultivate more middle-income groups, and make them the "main force" to stimulate consumption.
The author is vice president and researcher of the China (Hainan) Institute for Reform and Development