Insufficient domestic demand is the main contradiction currently constraining economic development. The recent Central Political Bureau meeting pointed out the need to view the current economic situation comprehensively, objectively, and calmly, to face difficulties, to strengthen confidence, and to effectively enhance the sense of responsibility and urgency in economic work.

Recently, a series of incremental policies have been introduced in succession, focusing more on benefiting people's livelihoods and promoting consumption in the expansion of domestic demand, and actively playing the effective role of investment in driving growth.

Focusing on Key Points and Taking Initiative

The Central Political Bureau meeting called for focusing on key points and taking initiative, effectively implementing existing policies, and intensifying the introduction of incremental policies. It emphasized the need to further improve the targeting and effectiveness of policy measures and strive to achieve the annual goals and tasks for economic and social development. At a recent press conference held by the State Council Information Office, the National Development and Reform Commission introduced the systematic implementation of a package of incremental policies from five aspects: increasing counter-cyclical macro policy adjustments, expanding domestic effective demand, increasing assistance to enterprises, promoting the stabilization of the real estate market, and boosting the capital market. This has sent a positive signal that policies are intensifying to promote sustained economic recovery and improvement.

Wen Bin, Chief Economist of China Minsheng Bank, believes that in recent times, macro policies have significantly increased in intensity and accelerated in pace. Initially, relevant departments played an active role in boosting confidence and reversing expectations through measures such as reducing reserve requirements, interest rates, existing housing loan interest rates and down payment ratios, and supporting the capital market. Subsequently, macro policies were deployed comprehensively, aiming to promote an upward structural shift towards optimization and a sustained positive development trend, further consolidating the economic foundation and reinforcing the confidence and expectations of business entities, ultimately forming a virtuous cycle of growth.

"We not only focus on solving current difficulties and problems but also pay more attention to addressing major issues in the medium and long-term development of the economy, strengthening the foundation, benefiting the long term, ensuring sustainability, and making steady progress, to promote high-quality development," said Zheng Shanjie, Director of the National Development and Reform Commission. The package of incremental policies places greater emphasis on improving the quality of economic development, supporting the healthy development of the real economy and business entities, and coordinating high-quality development with high-level security.

Wei Qijia, Director of the Industrial Economic Research Office at the National Information Center, introduced that in response to some issues reflected in the economic operation of the third quarter, the central government introduced a package of incremental policies. On the one hand, through policy coordination and cooperation, efforts are made to achieve this year's economic growth targets. On the other hand, by planning related projects in advance and other measures, efforts are made to promote policy implementation ahead of schedule next year, to promote the completion of the "14th Five-Year Plan" goals, and to ensure a good start for the "15th Five-Year Plan."

In terms of expanding domestic effective demand, Wei Qijia believes that relevant policies are highly targeted and conducive to unblocking the current economic circulation and improving the speed of circulation. At the same time, it is beneficial to further consolidate the basic capabilities for high-quality development. In particular, policies such as "two new" and "two heavy" are of positive significance for enterprises to expand reproduction, release potential consumer demand, and better play the guiding and driving role of government investment.

Combining Consumption Promotion with People's Livelihood

The Central Political Bureau meeting proposed to combine consumption promotion with people's livelihood, to promote income growth for low and middle-income groups, and to improve the consumption structure.In the incremental policies to promote consumption, the first step is to increase support for specific groups. It is reported that relevant departments have issued one-time living allowances to people in difficulty such as those in extreme poverty and orphans. The standards for student financial aid will be raised and the policy coverage will be expanded. At the same time, the national student loans for undergraduate and graduate students will be increased, and efforts will be made to reduce loan interest rates.

Wei Qijia believes that the key to promoting consumption lies in implementing the policy of exchanging old consumer goods for new ones and releasing the potential of new growth points in consumption such as elderly care and child care.

On the one hand, in combination with the "two new" (new infrastructure and new urbanization), efforts will be made to continuously expand the consumption of bulk commodities. Large-scale equipment updates and the exchange of old consumer goods for new ones are not only conducive to releasing demand potential but also conducive to promoting energy conservation and carbon reduction, and promoting a comprehensive green transformation. At present, the supporting implementation details for the exchange of old consumer goods for new ones have been fully introduced, funds have been fully allocated, and policies have been fully launched. With the policy of exchanging old for new gradually implemented in various places, the sales volume of key consumer goods has increased significantly. In August, the national retail volume of passenger cars was 1.905 million, a month-on-month increase of 10.8%, of which the retail volume of new energy vehicles was 1.027 million, a month-on-month increase of 17%.

Data from the Ministry of Commerce shows that since the implementation of the policy of exchanging old home appliances for new ones, more than 8.238 million consumers have purchased 11.7798 million units of eight categories of home appliance products, driving sales of more than 55.793 billion yuan. As of 24:00 on October 7, the Ministry of Commerce's new car exchange platform has received more than 1.27 million subsidy applications, driving new car sales of more than 160 billion yuan, of which the proportion of new energy vehicle subsidy applications exceeded 60%.

"As policies continue to be implemented in detail, consumption is expected to continue to improve," said Wei Qijia. According to the National Development and Reform Commission, in the future, efforts will be increased to promote the implementation of relevant policies and promote the continuous increase of commodity consumption.

On the other hand, efforts will be made to expand service consumption such as elderly care and child care. In terms of specific measures, support and standardization will be provided for the development of the elderly care and child care industries by social forces, and efforts will be made to improve the policy system supporting childbirth, and to improve the level of basic childbirth and children's medical public services. At the same time, new types of consumption such as digital consumption and green consumption will be cultivated to enhance the adaptability of the supply side to mid-to-high-end demand.

Play the effective driving role of investment

To expand domestic demand, it is necessary to enhance the fundamental role of consumption in economic development and the key role of investment in optimizing the supply structure.

It is reported that almost 6 trillion yuan of government investment this year has been basically implemented in specific projects, and efforts are being made to form more physical work volume. In terms of private investment, this year, the National Development and Reform Commission has recommended 1,635 major projects to private capital, attracting private capital to participate in 441 projects with a total investment of 344.8 billion yuan. Private capital has made new progress in participating in major infrastructure projects such as nuclear power and railways. Next, efforts will be made to improve the long-term mechanism for private enterprises to participate in national major construction projects, continue to recommend high-quality projects, promote more private capital to participate in major infrastructure projects such as railways, energy, and water conservancy, and accelerate the screening to form a new batch of national key private investment project lists. At the same time, the new mechanism of cooperation between government and social capital will be standardized, and more private investment projects that meet the conditions will be supported to issue infrastructure REITs, and the pilot cooperation of investment and loan linkage will be deepened.

"After sorting out, there is a large demand for incremental funds in areas such as the construction of infrastructure, the urbanization of agricultural transfer population, the construction of high-standard farmland, the construction of underground pipelines, and urban renewal," said Zheng Shanjie. Next year, it is necessary to continue to issue long-term special national bonds and optimize the direction of investment to support the construction of "two heavy" (heavy industry and heavy infrastructure). The National Development and Reform Commission will advance the issuance of a 100 billion yuan central budget investment plan and a 100 billion yuan "two heavy" construction project list for next year within this year, to support localities to accelerate the start of preliminary work and start construction in advance.Liu Sushe, Deputy Director of the National Development and Reform Commission (NDRC), introduced that the NDRC is working with relevant departments and localities to plan and reserve a batch of major projects for "two focuses" construction from top to bottom, and at the same time, accelerate the innovation of policies, plans, and institutional mechanisms, etc., "soft construction". The central budget investment continues to support foundational, public welfare, and long-term projects, and accelerates the filling of the shortcomings and weak links in China's modernization construction.

Taking urban renewal as an example, it is estimated that in the next five years, the total length of various types of pipelines such as urban gas, water supply and drainage, and heating that need to be renovated will be nearly 600,000 kilometers, with a total investment demand of about 4 trillion yuan. Liu Sushe introduced that in the two "100 billion" project lists and investment plans, urban renewal occupies a certain proportion, mainly arranging the construction of urban gas, water supply and drainage, heating and other pipeline projects, highlighting key cities and central urban areas with large population scale and high density. At the same time, continue to coordinate and increase the support of central budget investment for urban renewal projects such as the renovation of old urban communities, urban villages, and dilapidated housing. Study to include urban renewal projects with certain revenue such as the renovation of old streets (old factory areas) in the scope of local government special bonds.

The promotion of the 102 major projects in the "14th Five-Year Plan" will be intensified. It is reported that 92% of the 5,100 specific projects involved in the 102 major projects have started construction or have been completed. Next, the NDRC will increase the coordination strength, strengthen financial support and resource protection, and promote the 409 projects that have not yet started construction to start construction as soon as possible, to ensure the smooth conclusion of the 102 major projects in the "14th Five-Year Plan" by the end of next year.

New urbanization is a "multiplier" for expanding consumption and an "accelerator" for driving investment. Zheng Bei, Deputy Director of the NDRC, said that focusing on removing the blockages and difficulties in the process of urbanization for more than 170 million migrant workers and their accompanying family members, for the problem of difficult household registration in big cities, the focus will be on accelerating the relaxation of household registration conditions in cities with a permanent population of more than 3 million in the urban area, fully establishing public household registration in street communities, and improving the policy of renting and registering household registration; for the most concerned issues of agricultural transfer population such as education and medical care, increase the support of long-term special national bonds for projects such as the construction of ordinary high schools in cities with concentrated population inflow and the renovation of hospital wards.