How to Understand the Current Drivers of Economic Growth and Identify Reform Breakthroughs in China

The current driving mechanism behind China’s economic growth,whether it is consumer-driven or investment-driven,is not only a core issue for Chinese economic policymakers but also a foundational question in constructing an independent knowledge system for China.Building upon a theoretical framework that combines supply-side and demand-side structures to understand China’s potential growth,this paper proposes a theoretical hypothesis: “a short-to-medium-term fusion mechanism between investment and consumption will support China’s economy to achieve a high-speed growth.” The analysis focuses on the significant interactions between investment and consumption in today’s China.These mechanisms can be summarized as follows: 1.Capital expenditure in the manufacturing industry for transformation and upgradation→ the creation of high-income employment opportunities → an increase in the middle-income population → the expansion of demand for consumption.2.R & D expenditure increase → the creation of high-income employment opportunities → an increase in the middle-income population → the expansion of demand for consumption.3.Infrastructure investment activity for Innovation-driven economy → the creation of high-income employment opportunities→ an increase in the middle-income population → the expansion of demand for consumption.Based on a comprehensive analysis of the prominent factors currently constraining the formation of a beneficial investment-consumption cycle in China,this article concludes by identifying potential breakthroughs for reform and providing relevant policy recommendations.