Growth revamp calls for greater efforts to boost consumption

Investment and consumption are domestic drivers that help stabilize economic growth, but their functions differ. Investment ends up as capital, which increases supply or expands capacity, whereas consumption serves to fulfill people's material and spiritual needs.

While both contribute to GDP, fiscal constraints necessitate a comparative analysis of their multiplier effects to determine the optimal expenditure allocation. The orientation of policy stimulus is shaped by multiple variables, and this analysis will examine the issue through four critical dimensions — China's domestic economic cycle, household income structure, fiscal expenditure structure and aging/urbanization rates. Although there remains significant academic debate, prioritizing consumption stimulus is justifiable within the current framework of expanding domestic demand.

Unimpeded economic circulation is a prerequisite for sustainable economic development. In 2020, the central call was for a dual-cycle development architecture with domestic cycle serving as the mainstay and domestic and international development reinforcing each other. However, the domestic cycle has long been hampered by bottlenecks, which contain persistent issues such as overcapacity in certain industries and insufficient effective demand. China's Producer Price Index has remained predominantly negative for most of the time since late 2012.