Expanding domestic demand key for China's 2024 economic development

Editor's note: Nan Yu is an associate researcher at the Institute of Economics, Chinese Academy of Social Sciences. The article reflects the author's opinions and not necessarily the views of CGTN.

Chinese officials at the annual Central Economic Work Conference held from Monday to Tuesday stressed the need to "focus on expanding domestic demand" and "stimulate potential consumption, expand productive investment to create a virtuous cycle of mutual promotion between consumption and investment." 

At the beginning of this year, with China's continuous economic and social recovery and the holiday effect in the second half of the year, the service sectors – such as catering, travel, tourism, culture and entertainment – have quickly recovered and flourished. This has played an important role in ensuring people's livelihood, releasing consumption potential and stabilizing economic growth. 

As of October 2023, retail sales of consumer goods reached 38.54 trillion yuan ($5.5 trillion), an increase of 6.9 percent year on year, and final consumption contributed 83.2 percent to growth in the first three quarters. 

Service consumption contributed significantly to the consumption growth, with retail sales of services increasing by 19 percent.

Consumption, especially service consumption, is expected to remain the main driver of growth next year. 

In 2023, investment has mainly relied on infrastructure and manufacturing investment, and real estate development and private investment have been relatively sluggish, dragging down the overall investment growth rate.

From the start of the year till October, investment growth was just 2.9 percent. Specifically, manufacturing investment increased by 6.2 percent, infrastructure investment increased by 8.27 percent, while the real estate development investment decreased by 9.3 percent, and private investment decreased by 0.5 percent. 

Expanding investment is an important starting point to boost domestic demand. We should speed up the improvement and expansion of the investment mechanism and actively expand the space for effective investment, so as to continuously expand the scale of investment, optimize the investment structure and raise the efficiency of investment.

At present, external risks are intensifying, the global economic recovery is slow, and there is a high probability that the stagflation development pattern formed in recent years will continue next year. 

Given the sluggish external demand, actively expanding domestic demand is an inevitable path to resist the impact of external risks and accelerate the construction of a new development pattern.