On the Transformation of Demand Structure in the Demographic New Normal of China
The structure of demand in China has long been characterized by strong investment and exports but weak consumption.The trends of ultra-low fertility rates,negative population growth,and aging will continue to impact this"strong in two,weak in one"demand structure.To alleviate the current lack of effective demand and to remove the con-straints that excess capacity in certain industries poses on economic growth,there is an urgent need to accelerate the transformation of the demand structure.This involves reducing investment in physical capital with low marginal returns and reallocating more resources towards expanding domestic consumption,particularly in human capital investment or related consumption,which offers higher marginal returns.It is recommended to implement effective policy measures,in line with the central government's call to"work towards increasing the proportion of household income in national income distribu-tion,and raising the share of labor compensation in primary distribution."At the same time,public fiscal investment should be increased in education,healthcare,and basic social security to enhance consumer capacity,reduce concerns about consumer spending,and increase the propensity to consume.In the short and medium term,these measures can stimulate economic growth,while in the long term,they can promote high-quality population development and enhance China's future economic growth potential.
negative population growthagingdemand structurephysical capitalhuman capitalconsumption
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