Expanding Domestic Demand: Essential for Stabilizing China's Economy

(ECNS) -- During the recent Central Economic Work Conference, China highlighted several key tasks for 2025, emphasizing the need to boost consumption, enhance investment efficiency, and expand domestic demand.

Experts assert that broadening domestic demand is crucial for addressing shortcomings in economic development.

Importance of Expanding Domestic Demand

Experts view the expansion of domestic demand as a critical policy initiative in light of existing economic challenges. According to Zhang Yongjun, the secretary general of the China Center for International Economic Exchanges, China managed a growth rate of about five percent in 2024, largely fueled by external demand. However, he warned that escalating geopolitical tensions and shifts in tariff regulations could disrupt global industrial and supply chains, posing challenges for the world economy in 2025.

“As external demand may decline in the upcoming year, boosting domestic demand is essential for maintaining steady and sustained growth in China,” stated Zhang.

This demand expansion, coupled with the development of a vast domestic market, is seen as a long-term and vital strategy for advancing Chinese modernization, as noted by Guo Liyan, a researcher at the Chinese Academy of Macroeconomic Research.

Jia Kang, the president of the China Academy of New-Supply Side Economics, emphasized that current macroeconomic policies present significant opportunities for increasing both domestic demand and effective investment. He observed that financial resources could be directed towards enhancing infrastructure and public service projects.

“This approach will not only improve the economic structure but also stimulate job creation and unlock consumption potential,” Jia added, highlighting that such public endeavors and valuable assets are crucial for sustaining upward economic momentum.

Strategies for Expanding Domestic Demand

According to experts, expanding effective investment, harnessing consumption potential, and addressing public concerns about spending are important factors to consider.

Jia believes that effective investment should take precedence in domestic demand expansion, as it will lead to job creation and increased incomes. Additionally, enhancing basic public services and social security systems is vital. He also called for a more standardized and robust factor market to secure property incomes.

Zhang stressed the need to identify new growth areas. Currently, China's consumption growth is mainly driven by durable goods like home appliances and cars. However, he predicts that the focus may shift towards the service sector next year.

Another strategy for expanding domestic demand involves increasing openness; for instance, China's visa-free policy for numerous countries is likely to boost consumption from foreign tourists visiting China.

The key to enhancing domestic demand lies in boosting consumption and optimizing investment effectiveness, thereby creating a virtuous cycle that fosters mutual benefits, as explained by Guo. This approach will solidify and elevate the role of domestic demand in supporting the national economy.

demand, economy, growth