Chinese State Media Emphasizes 1.4 Billion Domestic Market Ahead of 14th Five-Year Plan

Last Year Consumption Contribution to Economic Growth 57.8%, Urbanization Rate 44.38%, Engel's Coefficient 28.2%
Chinese Leadership Prepares for Prolonged US-China Conflict... Emphasizes Dual Circulation in 14th Five-Year Plan

[Asia Economy Beijing=Special Correspondent Jo Young-shin] The Chinese state-run People's Daily emphasized the "internal circulation economy (dual circulation economy)" on the 8th, stating that last year, the contribution of domestic consumption to China's economic growth was 57.8%. It noted that the structure of the Chinese economy changed during the "13th Five-Year Economic Development Plan (13·5 Plan, 2016?2020)."

The People's Daily stressed, "The Chinese economic structure, which previously relied on manufacturing, production, and exports, is shifting to a domestic consumption-centered model," adding, "Domestic consumption is the main driver of China's economic growth."

This is interpreted as highlighting the success of the 13·5 Plan, which has been promoted so far, ahead of the establishment of the "14th Five-Year Economic Development Plan (14·5 Plan, 2021?2025)."

[Image source=Yonhap News]

It also implies that the 14·5 Plan will be centered on dual circulation, given the inevitability of a global economic downturn caused by the US-China conflict and the novel coronavirus disease (COVID-19).

The term "dual circulation" was first used by President Xi Jinping at the Standing Committee of the Political Bureau of the Communist Party of China on May 14.

At that time, President Xi said, "We must deepen supply-side structural reform and leverage China's advantages as the world's largest market and domestic consumption potential to create a new development structure where domestic and international dual circulation promote each other."

Since then, the Chinese government has frequently mentioned the dual circulation theory of exports and domestic consumption, emphasizing China's domestic market of 1.4 billion people.

Chinese Premier Li Keqiang stated at the World Economic Forum held on the 15th of last month, "The new development model, with domestic major circulation as the main body and domestic and international circulation promoting each other, is not a closed domestic circulation but an open domestic and international dual circulation."

The People's Daily also emphasized that the Engel's coefficient of Chinese people related to consumption has significantly improved. Last year, the Engel's coefficient of Chinese people was 28.2%. It reported that the Engel's coefficient has decreased for eight consecutive years, indicating a change in the consumption structure of Chinese people.

This suggests that the quality of life of Chinese people has improved and that the Chinese consumer market will shift from being centered on "food (식)" to "entertainment" in the future.

The People's Daily mentioned changes in Chinese consumption trends, stating, "Chinese people's service consumption is growing faster than goods consumption, and rural consumption is growing faster than urban consumption."

Xinhua News Agency reported on the same day that China's urbanization rate (urban resident population/total population) is 44.38%. In 2013, the urbanization rate was 35.93%. It explained that more than 100 million rural residents have settled in cities, improving their quality of life.

Xinhua News Agency also appears to have released an article on the improvement of China's urbanization rate to emphasize domestic consumption.

Some analysts interpret the domestic consumption-related reports by Chinese state-run media such as People's Daily and Xinhua News Agency as indicating that the outline of the 14·5 Plan has been established.

It is expected that the Chinese government will put the domestic consumption card at the forefront in preparation for the prolonged US-China conflict.

There is also a high possibility that regulatory reform measures such as financial market opening will be introduced together to attract overseas capital.

Along with this, it is anticipated that specific economic support and development plans for underdeveloped western regions such as Tibet and the Xinjiang Uygur Autonomous Region, as well as plans to enhance the educational environment in those areas, will be announced.

This content was produced with the assistance of AI translation services.