Summary of the Key Points
This article focuses on China's economic situation, characterized by strong external demand and weak domestic demand. It uses the concept of "realization of surplus value" to explain why it is necessary to stimulate domestic demand by expanding service consumption. The article also analyzes the interrelationship between the domestic and international economic cycles, the contradiction between national security and commercial prosperity, and the importance of providing high-quality services. The concluding argument is that given the current unstable external demand environment, China must rely on the expansion of high-quality service industries to replace foreign demand and address the issue of insufficient domestic consumption.
Detailed Explanation
1. Why Start with Service Consumption to Boost Domestic Demand? – Surplus Value Must Be Transformed into Services
The article illustrates the concept of "realization of surplus value" with a simple example: Imagine you are a landlord who hires people to farm, and at the end of the year, you have 100,000 pounds of grain left over (this represents surplus value). However, you can't consume all of it alone, so what do you do? You need to convert the grain into services that you need—such as hiring people to build a house or hiring a nanny to take care of you. In this way, the grain is "used up" (the nanny uses her salary to buy grain, and you receive the service).
In the context of the economy, China produces a large amount of primary products (such as industrial goods and agricultural products). But if everyone only buys these physical items, they will soon become saturated (for example, once everyone has enough refrigerators and TVs at home). At this point, service consumption (such as high-quality property management, education, and healthcare) can convert these surplus products into experiences that people desire, thereby absorbing the excess capacity. The core issue with weak domestic demand is that the proportion of service consumption is too low, and surplus value has not been transformed into services that people are willing to pay for.
2. The Domestic and International Economic Cycles Are Like a seesaw – When External Demand Is Unstable, Domestic Demand Must Fill the Gap
What is the international economic cycle? It involves selling primary products abroad (such as exporting clothing and household appliances) to allow foreigners to help us realize our surplus value. The domestic economic cycle, on the other hand, relies on domestic service consumption to absorb these products. These two cycles are interconnected: when external demand is strong, domestic demand tends to be weak (for example, in the past, China relied heavily on exports). Now that the external demand environment has deteriorated (high interest rates on U.S. debt, EU regulations on e-commerce platforms, and increased trade tensions), the international cycle is unstable. Therefore, we need to expand domestic service consumption to fill the gap created by declining foreign demand; otherwise, products will remain unsold, leading to job losses and idle production capacity.
3. The Service Industry Cannot Be Expanded Arbitrarily – We Need to Balance Commercial Prosperity and National Security
The article warns that allowing capital to freely enter the service industry without regulation can lead to problems. For instance, if everyone focuses on opening KTVs and engaging in entertainment while neglecting agriculture and manufacturing, it could result in "industrial hollowing out." This would increase the dependency ratio (more people working in services and fewer producing goods). In times of crisis (such as a war), this imbalance could be devastating, as there might not be enough food available.
Therefore, throughout Chinese history, policies have favored agriculture over commerce, with the aim of supporting industries that enhance productivity rather than those that do not (such as gambling and prostitution). Today, while expanding service consumption, we must maintain standards and ensure that services promote production without compromising national security.
4. High-Quality Services Are Key – For Example, High-Quality Property Management in "Good Houses"
What constitutes high-quality services? The article uses the example of good housing policies: residential complexes that provide quality amenities (24-hour security, landscaping maintenance, elderly care) require employees who, in turn, spend their wages on goods and services, thereby supporting the economy. Such services are a win-win situation: they not only absorb surplus value but also improve people's quality of life without leading to industrial hollowing out.
Conversely, blindly expanding low-quality services (such as numerous KTVs and low-end entertainment venues) is unsustainable and wasteful of resources. The key to expanding service consumption lies in focusing on high quality, not just quantity.
5. Three Stages of Realizing Surplus Value – China Is Now in the Third Stage
The article outlines three stages of China's economic development:
- Stage 1: Early stages of poverty, where everyone worked together on infrastructure projects (building roads and bridges) to absorb surplus value.
- Stage 2: After infrastructure saturation, exports were used to realize surplus value, a period of focusing on growth without addressing underlying issues.
- Stage 3: Currently, with export challenges, China must rely on high-quality domestic services to achieve economic growth. We cannot be misled by the notion of pursuing immediate pleasure at the expense of quality development.
Each stage was chosen to align with the interests of the majority of the population. Now that we are in the third stage, finding a path for high-quality service consumption will help overcome the issue of weak domestic demand.
Conclusion
What China needs to do now is to use high-quality service consumption to transform surplus primary products into experiences that people desire. This approach will not only address the problem of weak domestic demand but also safeguard national security. This is the core logic behind the "15th Five-Year Plan" for expanding consumption.