Expanding domestic demand is a strategic move.

In the past, China’s productive capacity lagged behind, so the focus of policy was on expanding investment and boosting production capacity. Today, however, overall overcapacity persists, and continued reliance on large-scale investment to drive growth has limited effectiveness and diminishing marginal returns. While investment can serve as a crucial short-term engine for economic growth, final consumption is the sustainable driver of long-term expansion. Therefore, while it remains important to expand effective investment and harness its pivotal role, we must also more effectively leverage consumption as the fundamental foundation for growth.

( 2015 year 10 month 29 Speech at the Second Plenary Session of the Fifth Plenary Session of the 18th CPC Central Committee

Supply and demand are the two fundamental aspects of the intrinsic relationship in a market economy; they constitute a dialectical unity of opposition and interdependence. Neither can exist without the other—each is indispensable to the other, mutually dependent and mutually conditional. Without demand, supply cannot be realized; moreover, new demand can give rise to new supply. Conversely, without supply, demand cannot be satisfied; yet new supply can, in turn, create new demand.

The supply side and the demand side are the two fundamental tools for managing and regulating the macroeconomy. Demand-side management focuses on addressing aggregate-level issues and emphasizes short-term stabilization, primarily through adjustments to taxation, fiscal spending, and monetary and credit policies to stimulate or dampen demand and thereby promote economic growth. Supply-side management, by contrast, centers on resolving structural problems and aims to unleash the drivers of economic growth, mainly by optimizing factor allocation and adjusting the production structure to enhance the quality and efficiency of the supply system and, in turn, foster economic expansion.

Throughout the history of global economic development, the choice between prioritizing the supply side or the demand side in economic policy must be determined by a country’s macroeconomic conditions. It is one-sided to advocate for the supply side while ignoring the demand side, or vice versa; the two are not mutually exclusive substitutes, but rather require coordinated and complementary efforts.

( 2016 year 1 month 18 Speech at the Special Seminar for Principal Leading Cadres at the Provincial and Ministerial Levels on Studying and Implementing the Spirit of the Fifth Plenary Session of the 18th CPC Central Committee

Firmly implement the strategy of expanding domestic demand. Building a comprehensive domestic-demand system is vital to China’s long-term development and enduring stability. Since the reform and opening-up, particularly after China’s accession to the World Trade Organization, the country has integrated into the global economic cycle, giving rise to a pattern in which markets and resources—such as mineral resources— “ Both ends are exposed. ” , form “ World Factory ” This development model has played a crucial role in enabling China to seize the opportunities presented by economic globalization, rapidly enhance its economic strength, and improve the lives of its people. In recent years, however, economic globalization has encountered headwinds, and the current pandemic may further exacerbate the trend toward deglobalization, with a marked rise in domestic-oriented policies among countries. As a result, the external environment facing China’s development could undergo significant changes. Implementing the strategy of expanding domestic demand is essential for addressing the impact of the pandemic, for sustaining China’s long-term, steady, and healthy economic growth, and for meeting the people’s growing aspirations for a better life.

The advantage of a major economy lies in its internal self-sustaining cycle. China has 14 With a population of 100 million, the per capita GDP has already exceeded 1 With a GDP of tens of trillions of U.S. dollars, China is the world’s largest and most promising consumer market. The ongoing optimization and upgrading of household consumption, when combined with modern technology and advanced production methods, holds enormous potential for growth. We must firmly anchor ourselves in the strategic priority of expanding domestic demand, ensuring that all links—production, distribution, circulation, and consumption—are increasingly driven by the domestic market to foster a virtuous cycle. At the same time, we must clearly define the strategic direction of supply-side structural reform and promote a dynamic equilibrium between aggregate supply and aggregate demand at a higher level. Expanding domestic demand and further opening up are not mutually exclusive; the smoother the domestic circulation, the stronger the pull it exerts on global resources and factors of production, the more conducive it is to establishing a new development pattern in which the domestic circulation plays the dominant role while domestic and international circulations reinforce each other, and the more advantageous it becomes for cultivating new strengths in international competition and cooperation.

Consumption is a key driver of China’s economic growth, and the middle-income group forms the crucial foundation for such consumption. At present, China has approximately 4 China has the largest middle-income population in the world in absolute terms. Expanding the size of the middle-income group should be made a key policy objective, with efforts focused on optimizing the income distribution structure and establishing a sound mechanism whereby market forces determine the contribution of production factors such as knowledge, technology, management, and data, and remuneration is accordingly determined by that contribution. At the same time, investment in human capital must be increased so that more ordinary workers can, through their own efforts, join the ranks of the middle-income group.

( 2020 year 4 month 10 Speech at the Seventh Meeting of the Central Financial and Economic Commission

Since the beginning of this year, I have repeatedly emphasized the need to foster a new development pattern in which the domestic circulation plays the dominant role while the domestic and international circulations reinforce each other. This new development pattern has been put forward in light of changes in China’s stage of development, its external environment, and its underlying conditions; it represents a strategic choice for reshaping China’s new advantages in international cooperation and competition. In recent years, as the external environment has evolved and China’s factor endowments have shifted, the momentum of the international large-scale circulation—characterized by markets and resources being concentrated at both ends—has weakened markedly. By contrast, China’s domestic demand potential has continued to unfold, and the vitality of the domestic circulation has grown steadily, creating an objective dynamic of one receding as the other expands. The academic community has engaged in extensive discussions on this objective phenomenon, and further in-depth research is warranted to generate insightful and well-founded analyses.

Since 2008 Since the global financial crisis of 2008, China’s economy has been shifting toward a development model in which the domestic circulation plays the dominant role, with the ratio of the current-account surplus to GDP having changed from 2007 of the year 9.9% Reduced to less than the current 1% , the contribution rate of domestic demand to economic growth is 7 A year exceeds 100% In the period ahead, the dominant role of the domestic market in driving the national economic cycle will become even more pronounced, and the potential of domestic demand for economic growth will continue to be unleashed. We must steadfastly uphold supply-side structural reform as our strategic direction and focus on expanding domestic demand as our strategic pivot, so that production, distribution, circulation, and consumption increasingly rely on the domestic market. In this way, we can enhance the supply system’s ability to meet domestic demand and achieve a higher-level dynamic equilibrium in which demand drives supply and supply creates demand.

( 2020 year 8 month 24 Speech at the Symposium of Experts in the Economic and Social Spheres

We must accelerate the development of a comprehensive domestic demand system. This is a crucial foundation for ensuring the smooth circulation of the national economy and strengthening the dominant position of the domestic major circulation. Economic activity is a dynamic, cyclical process that repeats itself continuously. We need to advance deep-seated reforms and strengthen policy guidance, with a focus on unblocking key bottlenecks that impede economic circulation. Taking the satisfaction of domestic demand as our fundamental starting point, we should integrate the implementation of the strategy to expand domestic demand with the deepening of supply-side structural reform, strive to enhance the alignment between the supply system and domestic demand, and thereby establish a higher-level dynamic equilibrium in which demand drives supply and supply creates demand. We must also strengthen the development of a modern circulation system, improving both its physical infrastructure and digital platforms, as well as its distribution channels and online platforms, so as to solidify the important foundation for the dual circulation—domestic and international.

( 2020 year 10 month 29 Speech at the Second Plenary Session of the Fifth Plenary Session of the 19th CPC Central Committee

On upholding the strategic cornerstone of expanding domestic demand: fostering a robust domestic market is a vital pillar for establishing the new development paradigm and embodies the inherent advantages of a major economy. The expansion of domestic demand we emphasize goes beyond merely increasing government public spending; it requires the establishment of effective institutional arrangements to appropriately guide consumption, savings, and investment.

The most fundamental way to expand consumption is to promote employment, improve social security, optimize the income distribution structure, expand the middle-income group, and make solid progress toward common prosperity. Expanding consumption must be integrated with improving the quality of people’s lives, tailored to the actual needs of different income groups, and supported by high-quality supply that enhances both consumers’ purchasing power and willingness to spend. We should systematically lift administrative restrictions on consumer purchases to unlock latent consumption potential; align with the trend of upgrading consumption patterns by innovating new forms and models of consumption, thereby creating new growth drivers such as service consumption and encouraging the repatriation of overseas spending. Special attention should be given to rural consumption demand, fully tapping the consumption potential in counties and townships. The vocational and technical education system should be improved to achieve fuller and higher-quality employment. Public consumption should be appropriately increased, with greater efficiency in public spending on education, healthcare, elderly care, childcare, and other essential services.

We must bolster the momentum for investment growth and continue to play a pivotal role in this regard. We need to optimize the investment system and facilitate the rational conversion of savings into investment. The guiding and leveraging role of central budgetary investment should be fully leveraged, with particular emphasis on areas that exhibit strong spillover effects and deliver high social benefits. We must comprehensively improve the investment environment, foster sound investment expectations, and stimulate investment vitality across society. We should vigorously develop the digital economy, increase investment in new types of infrastructure, accelerate the digital, intelligent, and green transformation of traditional industries, and promote both the digitalization of industries and the industrial application of digital technologies. We should disseminate advanced and applicable technologies and expand investment in equipment upgrades and technological renovations in the manufacturing sector. We must deepen the advancement of new urbanization, implement urban renewal initiatives, and carry out renovation projects for older residential communities in urban areas. We should enhance infrastructure and logistics capabilities, build a modern logistics system, and launch a number of major projects in such fields as integrated transportation, basic scientific research, public health, ecological conservation, and rural development.

( 2020 year 12 month 16 Speech at the Central Economic Work Conference

In today’s world, the most scarce resource is the market. The market represents a tremendous advantage for China, and we must fully harness and leverage this advantage, continuously consolidate and strengthen it, and turn it into a robust pillar for forging a new development paradigm. Expanding domestic demand is neither a temporary measure to address financial risks and external shocks, nor a “flood-like” approach to stimulus, nor simply a matter of ramping up government investment. Rather, it requires establishing effective institutional mechanisms tailored to China’s actual economic conditions, unlocking the full potential of domestic demand, accelerating the development of a comprehensive domestic-demand system, strengthening demand-side management, expanding household consumption, and elevating the quality of consumption—thus making the building of an ultra-large-scale domestic market a sustainable historical process.

( 2021 year 1 month 11 Speech at the Special Seminar for Principal Leading Cadres at the Provincial and Ministerial Levels on Studying and Implementing the Spirit of the Fifth Plenary Session of the 19th CPC Central Committee

We must steadfastly focus on promoting high-quality development, seamlessly integrate the strategy of expanding domestic demand with deepening supply-side structural reform, strengthen the endogenous momentum and reliability of the domestic circulation, enhance the quality and level of the international circulation, accelerate the building of a modernized economic system, make concerted efforts to raise total factor productivity, bolster the resilience and security of industrial and supply chains, advance integrated urban–rural development and balanced regional development, and thereby achieve both qualitative improvement and reasonable quantitative growth in the economy.

( 2022 year 10 month 16 Report to the 20th National Congress of the Communist Party of China

Insufficient aggregate demand is the most salient contradiction confronting the current economic operation. It is imperative to vigorously implement the strategy of expanding domestic demand and adopt more robust measures to ensure a virtuous cycle in social reproduction. China has effectively addressed this challenge by expanding domestic demand. 1998 the Asian financial crisis of that year, 2008 the global financial crisis of the year, 2020 Since the onset of the COVID-19 pandemic, we have accumulated valuable experience; it is now essential to refine policy measures and fully leverage the fundamental role of consumption and the pivotal role of investment.

First, we must prioritize the restoration and expansion of consumption. As China continues to advance new-type industrialization, informatization, urbanization, and agricultural modernization, consumption is increasingly becoming a fundamental driver of economic growth. We need to enhance consumers’ purchasing power, improve consumption conditions, and innovate consumption scenarios so that the full potential of consumption can be unleashed. Since consumption is a function of income, we must increase urban and rural residents’ incomes through multiple channels, with particular emphasis on boosting the purchasing power of low- and middle-income households—whose propensity to consume is high but who have been disproportionately affected by the pandemic. We should also appropriately expand consumer credit to support spending on housing improvements, new-energy vehicles, elderly care services, and education, healthcare, cultural, and sports services.

Second, we will effectively leverage government investment and policy incentives to stimulate investment across the entire society. At present, private investment expectations remain weak, making it imperative for government investment to play a robust guiding role—this is a powerful tool for countering cyclical economic fluctuations. Government investment should be intensified in areas that lay solid foundations, deliver long-term benefits, address critical shortcomings, and promote structural adjustment, while accelerating implementation. “ The 14th Five-Year Plan ” We will undertake major projects to strengthen infrastructure in transportation, energy, water conservancy, agriculture, information technology, and other sectors, and enhance connectivity among regions. We will support the development of modern infrastructure systems in city clusters and metropolitan areas, and implement urban renewal and rural development initiatives. We will increase investment in science, technology, and industry, and proactively build capacity for the research and development of major scientific and technological infrastructure as well as critical core technologies. Policy-based finance should play a counter-cyclical regulatory role by stepping up financing support for major projects that align with national development plans and industrial policies, while striking an appropriate balance between economic and social benefits. We will relax market access for private investment, encouraging and attracting more private capital to participate in the construction of major national projects and projects aimed at addressing weak links in the economy. We will also strengthen project pipelines and preliminary work, and ensure adequate provision of essential factors of production.

( 2022 year 12 month 15 Speech at the Central Economic Work Conference

We must better coordinate the expansion of domestic demand with the deepening of supply-side structural reform, thereby bolstering the momentum and reliability of the domestic economic loop. The key to forging a new development paradigm lies in ensuring the unimpeded flow of economic cycles. Whether this can be achieved hinges largely on whether both the supply and demand sides are robustly powered, broadly aligned, dynamically balanced, and engaged in positive, mutually reinforcing interactions. To this end, we need to seamlessly integrate the strategy of expanding domestic demand with the deepening of supply-side structural reform, mobilizing both supply and demand simultaneously and in coordinated fashion, so as to establish a higher-level dynamic equilibrium in which demand drives supply and supply, in turn, creates new demand, thus fostering a virtuous cycle of the national economy. We must resolutely implement the Outline for the Strategy of Expanding Domestic Demand, swiftly put in place a comprehensive domestic-demand system, and focus on expanding consumption demand supported by income, investment demand that yields reasonable returns, and financial demand constrained by principal and debt obligations. We should establish and refine long-term mechanisms for boosting household consumption, ensuring that residents have stable incomes to spend, feel confident about spending without undue concerns, and enjoy a favorable consumption environment that enhances their sense of satisfaction and encourages them to consume more. We must also improve the mechanisms for expanding investment, broaden the scope for effective investment, make appropriately forward-looking arrangements for the development of new infrastructure, increase investment in high-tech industries and strategic emerging industries, and continuously invigorate private-sector investment. In addition, we should continue to deepen supply-side structural reform, persistently advance scientific and technological innovation as well as institutional innovation, break through bottlenecks, chokepoints, and vulnerabilities that constrain supply, strengthen the competitiveness and security of industrial and supply chains, and ensure that self-reliant, controllable, high-quality supply not only meets existing demand but also generates and leads new demand. Severe imbalances and misalignments between supply and demand, coupled with dysfunctional cyclical flows, are among the root causes of major risks in the economic and financial sectors; therefore, effectively coordinating the expansion of domestic demand with the deepening of supply-side structural reform will also help prevent and defuse such risks.

( 2023 year 1 month 31 Speech Delivered at the Second Collective Study Session of the 20th CPC Central Political Bureau

It is imperative to strike a balanced relationship between aggregate supply and aggregate demand and ensure the smooth circulation of the national economy. We must uphold coordinated efforts on both the supply and demand sides to achieve dynamic equilibrium, continue to deepen supply-side structural reform with a mix of proactive measures and prudent restraint, and enhance the compatibility and balance between supply and demand. Expanding domestic demand is vital not only for economic stability but also for economic security; it is not a temporary expedient but a strategic initiative. We need to accelerate efforts to address shortcomings in domestic demand, particularly in consumption, so that domestic demand can serve as the primary driver of economic growth and a stabilizing anchor.

( 2024 year 12 month 11 Speech at the Central Economic Work Conference

The draft Proposal underscores the need to strengthen the domestic major circulation, making arrangements for building a robust domestic market and accelerating the establishment of a high-standard socialist market economy. It emphasizes adhering to the strategic pivot of expanding domestic demand, closely integrating measures to improve people’s livelihoods with efforts to boost consumption, and aligning investment in physical assets with investment in human capital. The proposal calls for vigorous efforts to stimulate consumption, expand effective investment, and resolutely remove bottlenecks and obstacles that impede the development of a unified national market. It also stresses fully unleashing the vitality of all types of market entities, speeding up the improvement of institutional mechanisms for market-based allocation of production factors, and enhancing the effectiveness of macroeconomic governance. At the same time, the proposal advocates expanding international circulation, steadily advancing institution-based opening-up, safeguarding the multilateral trading system, and promoting high-quality joint development. “ Belt and Road ”。

( 2025 year 10 month 20 Daily “Explanation on the ‘Suggestions of the CPC Central Committee on Formulating the 15th Five-Year Plan for National Economic and Social Development’”