Domestic Demand Continued to Recover and Expand Steadily

Since the beginning of this year, domestic demand has steadily expanded, total retail sales of consumer goods and fixed asset investment indicators have rebounded significantly, consumption has continued to recover steadily, and investment has maintained growth. As China continues to advance reform, opening up and innovation, strive to promote high-quality development, and accelerate the construction of a new development pattern, the domestic economy has maintained a good momentum of stabilization and recovery.

Surging consumption momentum

The contribution of domestic demand has steadily increased

Domestic demand is the basic impetus of our country's economic development. Since the beginning of this year, the Chinese economy has withstood the downward pressure brought about by foreign risks and challenges and multiple domestic factors. Consumption has recovered fairly quickly, investment has continued to grow, and the contribution of domestic demand has steadily increased. In the third quarter, final consumption expenditure drove 4.6 percentage points of economic growth, contributing 94.8% to economic growth, an increase of 10.3 percentage points over the second quarter. Total capital formation contributed 22.3 percent to economic growth, boosting GDP by 1.1 percentage points. Relevant indicators continue to pick up, reflecting the continued release of domestic demand potential.

Taking consumption as an example, since the economy and society have fully resumed normal operation, offline consumption has recovered in an orderly manner, the policy of expanding domestic demand and promoting consumption has continued to show its effect, and consumption has risen out of the "acceleration" and become the main driving force for economic growth. In particular, the recovery of service consumption accelerated. In the first three quarters of this year, retail sales of services grew by 18.9 percent year-on-year, faster than retail sales of goods by 13.4 percentage points. In the first October, retail sales of services increased by 19% year-on-year, 0.1 percentage points faster than in the first September.

The recovery of consumption reflects the improvement of consumer confidence. From a monthly point of view, the total retail sales of consumer goods in July, August, September and October increased by 2.5%, 4.6%, 5.5% and 7.6%, respectively, indicating a significant trend of stabilization and recovery. The growth rate of commodity consumption accelerated in October, with retail sales of commodities up 6.5 percent year on year, 1.9 percentage points higher than the previous month. Outdoor sports, new electronic products, new energy vehicles, smart home appliances and other upgraded goods are growing well.

To increase consumption, the most fundamental thing is to promote employment, improve social security, optimize the income distribution structure, expand the middle-income group, and increase people's income to increase their consumption power. In the first three quarters of this year, the per capita disposable income of Chinese residents was 29,398 yuan, up 5.9 percent year-on-year in real terms, 0.1 percentage point higher than that in the first half of this year.

"Chinese people have a lot of room and potential for consumption." Ning Jizhe, vice chairman of the China Center for International Economic Exchanges, said that China has a population of more than 1.4 billion, more than 400 million middle-income groups and 264 million elderly people over the age of 60, and there are great needs for housing, medical care, education, elderly care and childcare. To unleash this huge demand, we need to improve social expectations, boost confidence in development, increase people's income through a variety of channels, with a focus on increasing the income of low - and middle-income groups, make up for weaknesses in public services, and eliminate the worries of people who are afraid to consume.

Investment is the combination of supply and demand. In the first 10 months of this year, fixed-asset investment grew 2.9 percent year on year. In the context of the continuous adjustment of the real estate market, investment growth has shown strong resilience. At the same time, there have been many positive changes in the investment structure. Data show that in the first October, investment in high-tech industries increased by 11.1% year-on-year, 8.2 percentage points higher than total fixed asset investment. Among them, investment in high-tech manufacturing and high-tech services increased by 11.3% and 10.5%, respectively. Investment continues to play a key role in expanding domestic demand, driving economic growth, and optimizing the supply structure.

In July this year, the "Opinions of the CPC Central Committee and The State Council on Promoting the Development and Growth of the Private economy" was released, and relevant departments and regions issued a series of policies and measures to promote the development of the private economy in accordance with the central deployment requirements. With the detailed implementation of relevant policies and measures, the development of the private economy has undergone positive changes, and on the whole, it has maintained a good recovery trend. The decline in private investment has narrowed for two consecutive months. In the first October, private investment fell 0.5 percent year-on-year, 0.1 percentage points narrower than the first three quarters and 0.2 percentage points narrower than the first August.

In the past three years, the private economy has been hit hard by the epidemic, and it will take a long time for small and micro enterprises to recover. Recently, a survey conducted by the National Bureau of Statistics for 59,000 small and micro enterprises showed that the production orders and business conditions of enterprises have generally improved.

According to the third quarter monetary policy implementation report recently released by the People's Bank of China, since the beginning of this year, monetary and credit policies have continuously improved the quality and effectiveness of supporting private enterprises, promoted the continuous increase, expansion and price reduction of private enterprise financing, and fully promoted the private economy to become bigger, better and stronger.

"Since the second half of the year, a number of policies to encourage the development and growth of the private economy have made comprehensive efforts to enhance investment willingness, smooth investment channels, and enhance investment capacity, creating a good policy environment for boosting the expectations and confidence of private enterprises." Ren Rongrong, a researcher at the Investment Research Institute of the Chinese Academy of Macroeconomic Research, said.

Steady recovery

The domestic market is stronger

 

Tangible life confirms a steady recovery in domestic demand. 

In the rapid recovery of service consumption at the same time, the bulk durable consumer goods market also showed a steady recovery trend. The third quarter data show that the penetration rate of new energy vehicles has further increased, and there is a marginal improvement in real estate related consumption. According to the recently released "China Automobile Warranty Rate Research Report", the sales volume of new energy vehicles has increased significantly this year, and the market penetration rate has continued to remain high, contributing more to the growth of domestic new car sales than fuel vehicles.

 

The demand for home furnishing is strong and resilient, and the incremental space for upgrading consumption is broad. According to the data of the China Building Materials Circulation Association, the sales of building materials and home stores above designated size in the first three quarters rose 34.77% year-on-year. "A series of measures to promote household consumption are gradually showing policy effects." China Building materials circulation Association President Qin Zhanxue said.

Infrastructure is an important support for economic and social development. Since the beginning of this year, major projects have been actively started, funding has been strengthened, and investment in infrastructure construction has maintained steady growth on the whole. In the first 10 months of this year, infrastructure investment grew by 5.9% year-on-year, 3 percentage points higher than the total investment. Investment in shoring up weak areas in people's livelihood grew rapidly, with the growth rate of investment in water transport, railway transport, electricity and heat production and supply, and gas production and supply all exceeding 20%.

In Yixing City, Jiangsu Province, the longest lake-bottom tunnel under construction in China - Zhushanhu Tunnel in Yixing section of Provincial Highway 341 has entered the construction sprint stage. The tunnel is about 7.81 kilometers long and runs through the waters of Taihu Lake. Hua Kaikai, deputy chief engineer of China Railway 16th Bureau Project, said that after the project is completed and opened to traffic, it will further optimize the connectivity between Wuxi Binhu District, Huishan District, Yixing City and other places, which is of great significance to promote regional economic development and tourism resources development, and further promote the integrated development of the Yangtze River Delta.

In October, the National Development and Reform Commission approved 130 fixed asset investment projects, with a total investment of 1.08 trillion yuan, to strengthen the advantages of traditional infrastructure construction such as energy and water conservancy, make up for weaknesses, and constantly open up new space for investment.

Zhang Yuxian, director of the economic forecasting Department of the State Information Center, said that all aspects of the data once again confirmed that China's high-quality economic development has full resilience, not only for the present, but also for the future.

Supply and demand work in both directions

Opening up new space for economic growth

Despite a more complex and severe external environment, new opportunities are emerging and new drivers of economic growth are taking shape.

Demand side force, focus on personalized, quality and diversity of new consumer demand, and continue to lead the new trend of the consumer market. Following online shopping, live delivery, and community group buying, instant retail has become another new consumption channel seized by major e-commerce platforms this year. From online shopping to 3 days, the next day, to the present hour, the emergence of instant retail, greatly meet the needs of consumers for the timeliness of goods. Driven by the rapid growth of new consumption channels, the online retail sales of physical goods increased by 8.4% year-on-year in the first October, accounting for 26.7% of the total retail sales of social consumer goods, 0.5 percentage points higher than the same period last year.

Supply-side innovation, with new products, new services to respond to market expectations, to meet the public's yearning for a better life. In Kunming, Yunnan Province, Nanping Pedestrian Street makes use of hundreds of historical and cultural buildings to build a time-honored street, transforming rich historical and cultural resources into new commercial traffic for the block. In Chengdu, Sichuan Province, the "sports +" industry is booming, and activities such as "Sports trend movement" and "Sports fashion Bazaar" are popular, and new consumption scenes such as sports, greenways, music and catering are increasingly abundant.

"The key is to cultivate consumption capacity. We will continue to promote economic stability and improve, continue to increase personal income, and ensure that consumption can play a bigger role as the foundation and scale advantage." Said Sheng Laiyun, deputy director of the National Bureau of Statistics.

With the arrival of the consumption season at the end of the year, Sichuan, Jiangxi and other places have issued a new round of consumer coupons, which are still mainly concentrated in the hot areas of residential consumption such as automobiles, home appliances, and catering, to further stimulate the market recovery.

The transformation of investment structure, from traditional infrastructure to new infrastructure, from traditional manufacturing to high-tech industries, China's investment structure continues to optimize, and promote economic quality change, efficiency change, and power change.

With the rise of the green economy, green industries such as new energy, energy conservation and environmental protection have received huge development opportunities. Under the dual promotion of technological innovation and policy support, high-end manufacturing industry has accelerated development. Actively expanding effective investment is conducive to raising the expectations of business entities, driving employment and consumption through the multiplier effect of investment, and promoting a virtuous cycle of the national economy. In addition, the investment project is also related to the future direction of industrial development, but also to build the foundation of high-quality development.

Liu Xiangdong, Vice Minister of the Economic Research Department of the China Center for International Economic Exchanges, said that with the acceleration of the transformation to high-quality development, the resilience and sustainability of China's economic development have been significantly enhanced, and the new driving force industry characterized by high-end, intelligent and green development has gradually replaced the old driving force characterized by the consumption of resource factors, and has become a new engine supporting China's economic growth in the future.

At present, the economy is in a critical period of recovery and development and industrial upgrading, and sustained economic development still faces difficult challenges such as insufficient demand, weak momentum, and accumulated risks in some areas. However, it should be noted that these problems are problems in the process of development and progress, and they can be gradually resolved by deepening reform, expanding opening-up, promoting innovation and promoting development.

Guo Liyan said that in the process of economic recovery wavy development and zigzag progress, it is normal for individual indicators in the domestic demand field to have temporary fluctuations, at present and in the next period, China's positive factors and favorable conditions for stable growth have increased significantly, and there is still much to be done to expand domestic demand.

 

China is the world's second largest consumer market and the largest online retail market, and the advantages of ultra-large scale market are still obvious. At the same time, accelerating the transformation and upgrading of traditional industries, optimizing the layout of new infrastructure, and implementing projects to make up for weaknesses in the field of people's livelihood will generate more investment demand. Green and intelligent products, represented by new energy vehicles, are booming, new sales models such as live streaming e-commerce and instant retail are more active, and new impetus for economic recovery continues to flow.

 

From the perspective of the whole year, as the effects of expanding domestic demand and promoting consumption continue to appear, and the pulling role of the consumption peak season at the end of the year and the beginning of the year, consumption in the fourth quarter is expected to continue to show a steady recovery trend, and the foundation for completing the annual target task is solid.

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