At present, my country’s economic development is facing new contradictions and challenges brought about by major changes in the internal and external environment, but my country’s development is still in an important strategic opportunity period, with sufficient resilience, huge potential and constantly bursting innovation vitality. To grasp the general trend of economic development and grasp the fundamental and overall issues in my country’s economic development, we must handle the relationship between short-term and medium-term, domestic and foreign demand, and opening up and reform, so as to release development potential and market vitality by expanding opening up and deepening reform, thereby winning the initiative and winning the future.
We should not only look at the short-term downward pressure on the economy, but also at the medium- and long-term economic growth trends
At present, my country’s economic operation is stable with changes, and there are concerns in the changes. In the short term, my country’s economic growth faces greater downward pressure and faces a complex situation with increasing dilemmas and multiple problems; but in the medium and long term, economic transformation and upgrading contains huge growth potential and provides important space for solving dilemmas and multiple problems.
On the one hand, short-term downward pressure on the economy is increasing. Over the past 40 years of reform and opening up, my country’s GDP has grown by an average of 9.5% per year. As the economic scale continues to increase, the trend of GDP growth slowing down is obvious. At present, the downward pressure on the domestic economy is increasing, the growth rate of consumption is slowing down, and the growth of effective investment is weak. There are both cyclical factors, but more of them are structural and institutional. We must maintain our determination, enhance our endurance, and have the courage to overcome difficulties. On the other hand, economic transformation holds great growth potential. After more than 40 years of reform and development, China has generally entered the late stage of industrialization, and its economic transformation and upgrading presents many new features. First, my country’s economic transformation holds great development potential and market space. In the next 10 years, the proportion of my country’s tertiary industry is expected to increase from the current 52.2% to about 65%; the proportion of urban residents’ service consumption is expected to increase from the current 45% to about 60%; and the urbanization rate of registered population is expected to increase from 43.37% to about 65%. With the transformation and upgrading of my country’s industrial structure, consumption structure, and urban-rural structure, the potential for domestic demand can reach more than 20 trillion US dollars, which will support economic growth of about 6% in the next 5 to 10 years.Second, the huge domestic demand potential contained in the economic transformation is conducive to forming good expectations for medium- and long-term development. According to preliminary estimates, if my country’s final consumption rate reaches about 60%, the consumption scale will reach about 45 trillion to 50 trillion yuan, and the new market space will reach more than 10 trillion yuan; if the service industry accounts for 65%, it will bring more than tens of trillions of yuan of investment space; with the integrated development of rural revitalization and new urbanization, it will directly drive investment and consumption demand of nearly 10 trillion yuan.Third, economic transformation and upgrading not only determines the growth rate, but also the quality of development. In the next 5 to 10 years, the release of domestic demand potential will bring about a huge superposition effect, providing new market space for innovation, entrepreneurship and creation; more importantly, economic transformation and upgrading will help improve the quality of economic growth, for example, the employment elasticity of new growth will be significantly improved.
At present and in the future, whether it is to resolve short-term contradictions or to achieve medium- and long-term economic transformation and upgrading, the key lies in stimulating market vitality through comprehensive and in-depth reform. First, encourage and support the development of the private economy. We must break all kinds of monopolies, especially those in the service sector, effectively release market vitality, enable the private economy to achieve effective investment under the guidance of market demand, and transform potential growth momentum into real economic competitiveness. Second, continuously optimize the business environment. Give full play to the decisive role of the market in resource allocation and focus on forming an environment of open market and fair competition.We should strengthen the fundamental status of competition policy and establish a fair competition review system that is compatible with it; deepen market-oriented reforms, build a unified urban and rural land market, and promote the two-way flow of urban and rural factors. Third, we should focus on reducing institutional transaction costs. Implement larger-scale tax and fee cuts; focus on solving the problem of inclusive finance that matches the financing needs of the real economy and reduce the financing costs of small, medium and micro enterprises; focus on breaking the monopoly structure and interest barriers in the fields of energy and transportation, and provide a fair and competitive market environment for the development of private enterprises. In addition, we should also strengthen the protection of intellectual property rights.
We should not only look at the current situation of slowing consumption growth, but also look at the growth potential hidden in the upgrading of consumption structure
After more than 40 years of reform and opening up, consumption has become an important engine of my country’s economic growth. Although the current consumption growth rate has slowed down, the trend of upgrading consumption structure is obvious, which contains huge growth potential.
First, the growth rate of consumption has gradually slowed down. In recent years, the growth rate of total retail sales of consumer goods in my country has slowed down, and the growth rate of per capita consumption has also declined. In analysis, there are factors such as the slowdown in the growth rate of material consumption, and the constraints of the contradiction of “demand but lack of supply” in service consumption. In general, there are still some prominent problems of market monopoly and administrative monopoly in the service industry, which has caused the prominent contradiction of insufficient supply, low quality and unreasonable structure of service consumption products. We need to pay great attention to this problem.
Second, consumption has become the main driving force for my country’s economic growth. Over the years, my country’s final consumption has increased significantly, with an average annual growth of about 10%, and its contribution to GDP growth has increased to 76.2%. Consumption has become the main driving force for my country’s economic growth. In addition, the consumption structure of residents has undergone profound changes, which is most evident in the decline in material consumption and the rapid growth of service consumption. In 2018, service consumption accounted for 44.2% of my country’s per capita consumer expenditure, an increase of 1.6 percentage points over the previous year.
It is estimated that in the next 5 to 10 years, if my country’s final consumption rate increases from the current 53% to about 60%, the consumption scale will reach 10 trillion to 15 trillion US dollars. In other words, the release of consumption potential will provide impetus for medium- and long-term sustainable growth. Looking further, the release of my country’s consumption potential will have a significant positive impact on global economic growth. From 2013 to 2016, calculated at constant US dollar prices, my country’s final consumption contributed an average of 23.4% to world consumption growth annually. It is estimated that my country’s consumption growth from 2016 to 2021 will reach 1.8 trillion US dollars, which will have a significant impact on global economic growth.
The main contradiction in our society has transformed into the contradiction between the people’s growing needs for a better life and the unbalanced and inadequate development. Accelerating the opening up of the service industry market and expanding the effective supply of service products are the key points to promote the continuous optimization and upgrading of the consumption structure, and are also the “hard bones” to be tackled in deepening the supply-side structural reform.At present, there are still problems such as too high market access thresholds in the service industry such as education, medical care, health, and culture. It is recommended to fully open up the market access of the social capital in the service industry, cancel certain unreasonable restrictions on business scope, and gradually make social capital the main force in the service industry market. It is necessary to accelerate the opening of the public service industry market, adapt to the general trend of changes in public demand of nearly 1.4 billion people, introduce competitive supply entities in the supply link of the public service field, and form a new pattern of multiple supply entities and multiple entity competition.