Original title: Accelerate the formation of a virtuous circle in which consumption and investment promote each other.
* The Economic Work Conference proposed that it is necessary to stimulate potential consumption, expand profitable investment, and form a virtuous circle in which consumption and investment promote each other. Consumption and investment are important components of domestic demand and the basic driving force for China's economic growth. Promoting the formation of a virtuous circle in which consumption and investment promote each other and speeding up the circulation of the national economy will help expand domestic demand, continuously consolidate and enhance the upward trend of the economy, and continue to promote the effective improvement of the quality and reasonable growth of the economy.
Domestic demand, which is constituted by consumption and investment, is the basic driving force for China's economic growth.
In the expenditure-based GDP accounting, final consumption expenditure, gross capital formation, and net exports of goods and services together constitute the driving force for economic growth. Among them, final consumption expenditure and gross capital formation correspond to domestic demand, and net exports of goods and services correspond to external demand. Final consumption expenditure and gross capital formation are often referred to simply as consumption and investment, respectively. As China's economy shifts from a high-speed growth stage to a high-quality development stage, the role of domestic demand in driving China's economic growth has become increasingly apparent, and the driving role of consumption has become more and more significant.
In 2023, China's GDP will increase by 5 percent compared with 20222%。Among them, the contribution rate of final consumption expenditure to economic growth was 825%, driving GDP growth by 43 percentage points; Gross capital formation contributed 28 percent to economic growth9%, driving GDP growth by 15 percentage points. Combined, domestic demand contributed 111 to economic growth4%, driving GDP growth by 58 percentage points, which shows the ballast role of domestic demand on economic growth.
Since 2020, despite the impact of the new crown epidemic, the contribution rate of domestic demand to economic growth has far exceeded that of external demand, which is the basic driving force for China's economic growth. Specifically, in different years, the contribution rate and driving effect of consumption and investment to economic growth have risen and fallen with each other, but on average, the contribution rate and driving effect of consumption to economic growth are higher than those of investment, reflecting that consumption plays a fundamental role in economic growth in the stage of high-quality development.
Therefore, compared with external demand, domestic demand has become the absolute main force of China's economic growth; Compared with investment, consumption is the main driver of China's economic growth. This situation means that, on the one hand, to promote China's economic growth, we need to work hard to expand domestic demand, given that consumption and investment are important components of domestic demand, they are the focus of expanding domestic demand; On the other hand, we should continue to release the potential of consumption, promote the expansion and quality of consumption, and continuously enhance the basic role of consumption in economic growth. Only by driving the "two-wheel drive" of consumption and investment and achieving each other and forming a synergy can we give better play to the positive role of domestic demand in economic growth.
Consumption and investment are interdependent, and there is a virtuous circle that reinforces each other.
Consumption and investment are both the starting points for expanding domestic demand, and it is necessary not only to attach importance to and strengthen the basic role of consumption and the key role of investment, but also to attach importance to and strengthen the synergistic effect of consumption and investment in promoting each other, so as to form a virtuous circle in which consumption and investment promote each other, thereby speeding up the circulation of the national economy.
In general, consumption is closely related to people's daily lives. Whether it is subsistence consumption to meet the needs of clothing, food, housing and transportation at a lower level, or development consumption and enjoyment consumption, the purpose of consumption is to meet people's living needs, and the main body of consumption is residents. Investment mainly refers to an economic behavior used to increase material stock, which is specifically manifested in investment in fixed assets, such as the purchase of equipment, plants, and large appliances by enterprises. Although the main body of consumption and investment is different, the purpose of both is to meet the people's growing needs for a better life, but consumption is direct, and investment is realized through consumption.
Consumption and investment are interdependent and cannot be separated. What to invest and how much to invest determines what is produced and how much is produced, which in turn determines the content and scale of consumption. Without investment, there are no products and services that can be consumed. Therefore, whether it is the expansion of consumption scale or the upgrading of consumption quality, it is premised on the increase of investment. At the same time, consumption is the fundamental purpose and driving force of social production. If there is no consumption of the things produced by investment, it will be difficult to realize the reciprocating process of production, exchange, distribution, and consumption, and it will be difficult to sustain simple reproduction and expanded reproduction. Moreover, changes in consumer demand often lead to corresponding changes in investment and drive the development of related industries to adapt to the changed consumer demand, which is the general logic under the market economy. Therefore, on the one hand, investment is the primary driver of consumption, and investment must be aimed at satisfying consumption, and changes in consumption will affect investment to make corresponding adjustments to adapt; On the other hand, the new supply generated by investment will also stimulate new consumption of residents, forming a virtuous circle of supply creating demand, and achieving dynamic adaptation of supply and demand at a higher level.
It should be pointed out that consumption and investment are interdependent and there is a virtuous circle of mutual reinforcement, which means that the two are equally important, and not an antagonistic relationship. From the perspective of the development stage, China is in the stage of rapid development of new industrialization, informatization, urbanization, and agricultural modernization, and the problem of unbalanced and insufficient development is still prominent, and there is still a large space for investment. From the perspective of industrial structure, the manufacturing industry is the foundation of China's economy, to promote the optimization and upgrading of the industrial structure, to promote China's manufacturing to China's intelligent manufacturing and China's creation, to enhance China's industrial competitiveness and innovation, we need to continue to increase investment in key areas and key links. From the perspective of overall development and security, ensuring the safety of food, energy resources, and important industrial chains, and consolidating the foundation of economic security are inseparable from the support of a certain scale of investment. From the perspective of improving people's livelihood and well-being, we will continue to make up for weaknesses with continuous investment, so that the fruits of economic development can benefit thousands of households more and more fairly. In this way, maintaining a moderate scale of investment and optimizing the investment structure can not only bring about the growth of consumption scale, but also create new demand, promote the upgrading of consumption quality, and achieve a virtuous circle of mutual promotion between consumption and investment at a higher level.
With the improvement of social expectations as the starting point, we should accelerate the formation of a virtuous circle in which consumption and investment promote each other.
At present, the favorable conditions for China's development are stronger than the unfavorable factors, but there are still some difficulties and challenges to further promote the economic recovery, among which weak social expectations are one of the main manifestations. **The Economic Work Conference put forward "more policies that are conducive to stabilizing expectations, stabilizing growth, and stabilizing employment", and put stabilizing expectations in the first place of the "three stability", highlighting the importance of improving social expectations for the steady and long-term development of the economy. Stable and positive social expectations will have a direct positive impact on potential consumption and productive investment, and will help accelerate the formation of a virtuous circle in which consumption and investment promote each other.
The main purpose of improving social expectations is to consolidate and enhance the positive trend of economic recovery, continue to promote the economy to achieve qualitative and effective improvement and reasonable quantitative growth, and boost development confidence. Social expectations mainly depend on the judgment of market players on the economic situation. Adhere to the principle of seeking progress while maintaining stability, promoting stability through progress, establishing first and then breaking down, strengthen the counter-cyclical and cross-cyclical adjustment of macro policies, strengthen the innovation and coordination of policy tools, grasp and handle the relationship between speed and quality, macro data and micro feelings, economic development and improvement of people's livelihood, development and security, and constantly consolidate and enhance the positive trend of economic recovery, and strive to make GDP growth, employment, prices, disposable income and other representative indicators that reflect the economic situation positively improving, and constantly eliminate the "temperature difference" between macro data and micro feelingsVigorously create a good atmosphere conducive to the promotion of consumption willingness and investment willingness.
Driven by the improvement of social expectations, it is necessary to make good use of the advantages of the super-large-scale market to stimulate potential consumption and expand profitable investment, and to form a virtuous circle of mutual promotion and focus on expanding domestic demand. With the shift of residents' consumption demand from physical consumption to equal emphasis on physical and service consumption, residents' consumption is increasingly showing a trend of personalization, quality and diversification, and the expansion of profitable investment needs to adapt to this trend, take the change of consumption structure as the traction, strengthen the optimization and adjustment of industrial structure, promote the development of the service industry, enrich product varieties, improve product process design and quality, and enhance consumers' sense of experience, gain and satisfaction; At the same time, we will intensify the development of new processes and new products, bring forth the new, and create more new formats, new models and new scenarios that will help stimulate new consumer demand, such as digital consumption, green consumption, healthy consumption and other new consumption, and actively release consumption potential. Focusing on accelerating the formation of new quality productive forces and building a modern industrial system, while maintaining a reasonable growth in investment, we should optimize the investment structure, avoid low-level redundant construction, focus on key core technologies, strategic emerging industries, high-end manufacturing, major infrastructure and other fields, and increase investment in science and technology, education and health and other areas of people's livelihood. This will not only help enhance China's industrial competitiveness and innovation, but also help to achieve comprehensive benefits such as promoting employment, creating new consumer demand and boosting the economy. It should be pointed out that the expansion of effective investment should reflect the better combination of effective market and promising, give full play to the leveraging role of investment, gradually restore and enhance the willingness and ability of private investment, and promote the recovery of the private economy, which is one of the important yardsticks to measure the expected improvement effect of society.
Zhang Deyong is a researcher at the Chinese Academy of Social Sciences
*:Volkswagen**.