China's Official Media: Policy-Reform Synergy for Demand; Retail Up 1.2%, Investment Down 6.7%

At the end of July, the Political Bureau of the Central Committee explicitly required 'intensifying efforts to expand domestic demand' and 'effectively expanding domestic demand', and deployed work such as tapping the potential of service consumption and solidly advancing the planning and construction of the 'six networks'. Currently, the total volume of domestic demand is under pressure while structural optimization coexists; intensifying efforts to expand domestic demand relies both on timely policy measures to stabilize the present and on deepening reforms to open up long-term space.

From January to July, total retail sales of consumer goods increased by 1.2% year-on-year, while national fixed-asset investment fell by 6.7% year-on-year. During the same period, service retail sales grew by 5%, significantly faster than goods retail sales; retail sales of tourism, consulting, leasing services, and cultural, sports and leisure services all grew by more than 10%. Investment in high-tech industries increased by 5.0% year-on-year, with investment in electronic circuit manufacturing up 57.7% and investment in information services up 19.2%.

External uncertainty transmission and internal structural contradictions are intertwined.

The most prominent issue at present is supply-demand mismatch: residents' consumption willingness and ability have not been fully released, and the quality products and services that the domestic market can provide are not yet rich enough. The recovery of residents' consumption propensity is slow, and there remains a large gap in the supply of high-quality goods, personalized services and new types of consumption, leading to a considerable portion of demand spilling over or being suppressed. The Political Bureau of the Central Committee emphasized 'adapting to the consumption needs of different groups, expanding quality supply, and tapping the potential of service consumption'.

Private capital still faces implicit barriers in terms of financing availability and project information symmetry.

Expanding domestic demand is a strategic choice related to the long-term development of the economy. China is at a critical period of transition from old to new growth drivers; coordinated efforts of policy reinforcement and reform will build a solid foundation of domestic demand for sustained, new, high-quality economic development.