By Wang Wei & Liu Tao, Institute of Market Economy, DRC

Research Report, No.177, 2020 (Total 5921) 2020-7-9

Abstract: The 14th Five-Year Plan is aimed at shifting the focus of China’s economy from high-speed growth to high-quality development in the critical phase when developing large-scale domestic circulation to build a strong domestic market is urgently needed. The measure is not only a key move to cope with the severe and complicated international situation but a strategic one to usher in a new phase of building China into a strong modern country. At present, the ultra-large domestic market has become a new comparative advantage for China’s economic development, which will lay a solid foundation for developing a strong domestic market and building high-level domestic circulation. However, the development of the market still faces many constraints. In light of this, the government needs to give full play to the fundamental and leading role of consumption as well as the key and supporting role of investment, accelerate the development of a complete domestic demand system, enhance market resilience and resistance to brunt and improve the consumption capacity of domestic residents, especially the middle-income groups. To this end, China need to develop diversified supply systems in line with consumption upgrade and industrial transformation, make the infrastructure more systematic and intelligent, create an open, effective, and friendly environment with incentives, accelerate the building of a unified and orderly large market, further integrate domestic and international markets, and enhance the fundamental systems of market governance.

Keywords: strong domestic market, domestic circulation, approaches, policy options, the 14th Five-Year Plan