Consumption is the final demand, a key link and an important engine to smooth the domestic circulation, which has a lasting driving force for the economy and is related to safeguarding and improving people’s livelihood. Report to the 20th CPC National Congress of the Communist Party of China pointed out that the basic role of consumption in economic development should be enhanced. The Central Economic Work Conference proposed that efforts should be made to expand domestic demand and give priority to restoring and expanding consumption. At present, China’s new industrialization, informationization, urbanization and agricultural modernization have been further promoted, and people’s living standards have been continuously improved. To implement the decision-making arrangements of the CPC Central Committee and restore and expand consumer demand, it is necessary to adapt to the trend and direction of residents’ consumption upgrading, adopt more active and effective policies and measures, give full play to the basic role of consumption in economic development, and continuously enhance the lasting motivation for high-quality development.
Analysis shows that "the basic role of consumption in economic development" includes two dimensions. The first is the fundamental role of quantity. Consumption, as the starting point and the end result of economic activities, reflects the final demand and plays a guiding and pulling role in a country’s economic growth, thus playing a fundamental role in economic development. Macroscopically, it is reflected in the contribution of total consumption expenditure to economic development, and microscopically, it is reflected in consumers’ consumption ability, willingness or confidence. The second is the fundamental role of quality. The upgrading of consumption structure is helpful to promote the transformation of economic growth power, and then realize the upgrading of economic quality and efficiency. On the whole, strengthening the basic role of consumption in economic development is conducive to optimizing the major proportional relationship between production and consumption in the national economy and building an economic development mode in line with China’s long-term strategic interests; It is conducive to achieving mutual promotion between demand guidance and supply-side structural reform, driving economic transformation and upgrading, promoting high-quality development, and building a modern economic system; It is conducive to safeguarding and improving people’s livelihood, achieving mutual promotion and common progress in economic and social development, and better meeting the people’s growing needs for a better life.
Specifically, consumption enhances the basic role of economic development by smoothing the economic cycle, stimulating economic growth and promoting endogenous development. From the perspective of smooth economic cycle, only smooth social reproduction cycle can promote economic development in a high-level dynamic balance between supply and demand. Social reproduction is divided into production, distribution, exchange and consumption. Among them, production and consumption are interdependent. Production creates consumption mode, power and ability, while consumption exerts a reaction on production by providing motivation and objects. Only when consumption is completed, the goods and services produced are truly meaningful and their value can be realized. Production without consumption as the ultimate goal is inevitably unsustainable, which will interrupt the economic cycle and even lead to crisis. Therefore, developing and expanding consumption and stimulating new growth points with consumption upgrading and innovation can drive other links and play an important leading role in smoothing the economic cycle. From the perspective of promoting endogenous development, expanding consumption is an important way to enhance the endogenous motivation and sustainability of economic development. The advantage of a big country’s economy is that it is internally recyclable. China has a population of more than 1.4 billion, and its per capita GDP has exceeded $12,000, making it the most potential consumer market in the world. The optimization and upgrading of residents’ consumption is combined with modern technology and production methods, which contains huge growth space. China should give full play to the unique advantages of the super-large-scale domestic market and constantly iterate out new, rich and high-level consumer demand, thus providing an important foundation for promoting effective investment and long-term economic growth.
Restoring and expanding consumption is not only the key to the current sustained economic recovery, but also the inevitable requirement to support the continuous improvement of people’s quality of life. We should conform to the new requirements of people’s better life and the new trend of consumption upgrading, focus on the main problems that restrict the release of consumption potential at present, and enhance the basic role of consumption in economic development by increasing the income of urban and rural residents, improving the level of social security, promoting the integrated development of urban and rural areas, and creating a good environment.
First, increase the income of urban and rural residents through multiple channels and expand consumer demand in multiple dimensions. Income is the basis of consumption. To expand residents’ consumption, we should consider employment, income and consumption as a whole. By promoting higher quality and more adequate employment, we can achieve simultaneous growth of labor remuneration while improving labor productivity, thus laying a solid foundation for expanding consumption. We should adhere to the employment orientation of economic development, take many measures to stabilize employment, and improve expectations more through economic recovery, employment satisfaction and income increase; It is necessary to intensify macro-policy control, strengthen coordination and cooperation of various policies, create a good business environment, support the development of small and medium-sized enterprises and individual industrial and commercial households, stimulate the vitality of business entities, and increase the income of urban and rural residents through multiple channels; It is necessary to take expanding the size of middle-income groups as an important policy goal, optimize the income distribution structure, and improve the mechanism that knowledge, technology, management, data and other production factors are contributed by market evaluation and determined according to their contributions, so that residents can have a stable income to consume.
Second, improve the level of social security and improve residents’ consumption behavior. The relationship between social security and consumption is increasingly close. Whether there is enough guarantee for future life has become an important consideration for ordinary people to dare to spend. To achieve "dare to consume without worries", we need not only to make ordinary people have a stable income, but also a strong social security as a backing to avoid worries. By continuously expanding the coverage of social security, gradually improving the level of various social security benefits, and weaving a tight social safety net, we can provide basic living security for the majority of residents, thus releasing their potential consumption demand and energy.
Third, promote the integrated development of urban and rural areas, give play to the radiation-driven role of central cities and tap the consumption potential of counties and townships. For central cities, cities with conditions can promote the cultivation and construction of international consumption center cities, accelerate consumption agglomeration, and play a leading and driving role; For counties and townships, it is necessary to establish and improve the county-level commercial system with county as the center, towns as the focus and villages as the foundation, expand the coverage of e-commerce in rural areas, improve the consumption environment in counties, promote the urbanization construction with county as the important carrier, and promote the escalation of rural consumption.
Fourth, adhere to the combination of soft and hard deployment to create a good environment to promote consumption. On the one hand, it is necessary to strengthen the construction of multi-level consumption platforms, modern circulation systems, county and township commercial facilities and other hardware systems to provide more products and services with rich categories, excellent quality and convenience for residents’ consumption; On the other hand, it is necessary to make arrangements from the aspects of breaking down barriers that restrict consumption, improving the consumption standard system, strengthening law enforcement and supervision in the consumption field, and comprehensively strengthening the protection of consumers’ rights and interests to promote the overall optimization of the consumption environment.
(This article Source: Economic Daily Author: President of Zhejiang Gongshang University, researcher of Modern Business Research Center Wang Yonggui Sun Hao)
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