China's economy is a major economy with significant potential for domestic demand. The vast scale of the domestic market, the people's desire for a better life, and the continuously optimizing and upgrading consumption structure form a solid foundation for the sustained and robust growth of consumption.

Data from the National Bureau of Statistics show that in August, the total retail sales of consumer goods grew by 2.1% year-on-year, slowing down by 0.6 percentage points compared to July. From January to August, the national fixed asset investment grew by 3.4% year-on-year, decelerating by 0.2 percentage points compared to the first seven months. The core CPI, which excludes food and energy prices, decreased by 0.2% month-on-month and increased by 0.3% year-on-year. Various signs indicate that insufficient effective demand remains the main contradiction in the current economic operation.

In response to issues such as "insufficient domestic effective demand," the Central Committee of the Communist Party of China has made early assessments and has taken the lead in accelerating the introduction of a batch of targeted and combined policy measures centered on expanding domestic demand, boosting confidence, benefiting people's livelihood, and preventing risks. The policy effects are gradually becoming apparent. So far this year, China's economic operation has been generally stable, and the main tone of "stability" has not changed. Looking at consumption, from January to August, the total retail sales of consumer goods grew by 3.4% year-on-year, with a steady expansion of scale and a basically stable growth rate.

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Consumption that reflects structural optimization has provided important support. First, service consumption has grown rapidly. From January to August, the service retail sales increased by 6.9% year-on-year, 3.9 percentage points faster than the growth rate of commodity retail sales during the same period, with all categories of service retail achieving positive growth. Second, the policy of trading in old for new has shown its effectiveness. Driven by the policy to vigorously support the trading in of consumer goods, in August, the retail sales of home appliances and audio-visual equipment by units above a certain threshold turned from a decline to an increase, and the penetration rate of new energy vehicles broke through 50% for two consecutive months.

It should be recognized that overall consumer demand is still relatively weak at present, especially the consumption of some bulk commodities related to the real estate chain is sluggish. The Central Political Bureau emphasized in the deployment of work for the second half of the year that expanding domestic demand with a focus on boosting consumption is key, and the focus of economic policy should shift more towards benefiting people's livelihood and promoting consumption.

China's economy is a major economy with significant potential for domestic demand. From the perspective of demand structure, China's economic growth has shifted from being mainly driven by investment and exports to being driven by consumption, investment, and exports in a coordinated manner. From 2013 to 2023, the proportion of residents' consumption expenditure in the final consumption expenditure has been stable at around 70%, and the average annual contribution rate of final consumption expenditure to economic growth is 53.9%, making it the primary driving force of economic growth. The vast scale of the domestic market, the people's desire for a better life, and the continuously optimizing and upgrading consumption structure are the solid foundation for the sustained and robust growth of consumption.

To boost consumption, the first step is to enhance consumption capacity. When we discuss "consumption," we cannot only talk about "consumption" and cannot focus solely on the word "promote." Income is the most important factor affecting consumption, and employment is the main source of residents' income. It is necessary to increase support for industries and enterprises with strong employment absorption capabilities, develop and expand the private economy, and stabilize and expand employment capacity. Optimize the mechanism for a virtuous cycle of employment, income distribution, and consumption, and increase residents' income while reducing burdens, supporting the continuous expansion of consumption with the widespread increase in urban and rural residents' income.

Stabilize growth expectations. The sustainable growth of residents' consumption needs to be based on stable expectations, which include expectations for employment and income as well as expectations for economic growth. From small things like eating and dressing to big things like buying cars and houses, only with stable expectations will people "dare to consume" and "be willing to consume." At present, the economic operation faces an increasingly complex domestic and international environment, with many difficulties, challenges, and uncertainties. Macro policies need to continue to exert force and be more effective, strengthen counter-cyclical adjustments, accelerate the comprehensive implementation of policies that have been determined, and reserve and introduce a batch of incremental policy measures in a timely manner to unswervingly complete the annual economic and social development goals and tasks.

Grasp consumption trends. The consumption demands of our residents have gradually shifted from focusing on quantity to pursuing quality, from subsistence consumption to development and enjoyment consumption, and from mainly material consumption to mainly service consumption. It is necessary to adapt to the trend of residents' consumption upgrading, combine expanding consumption with improving the quality of people's lives, cultivate new hot spots in consumption, and expand new scenarios for consumption. It is also necessary to remove institutional and mechanical obstacles that restrict consumption, optimize restrictive measures in some areas such as housing and automobiles according to local conditions, and enable consumption potential to be transformed into actual purchasing power.

Expanding domestic demand with a focus on boosting consumption does not mean that investment is unimportant. Investment is both current demand and future supply. It is necessary to accelerate the construction of 102 major projects in the "14th Five-Year Plan," better leverage the leading and amplifying effect of government investment, and further mobilize the enthusiasm of private investment. Actively expand investment that is more conducive to promoting consumption, improve the adaptability and flexibility of the supply structure to changes in demand, and form a strong joint force to expand domestic demand.