The Central Political Bureau emphasized at the meeting on July 24th that we should expand consumption by increasing resident income, promote effective supply through final demand, and combine the strategy of expanding domestic demand with the deepening of supply-side structural reform. It particularly mentioned that we need to boost bulk consumption such as automobiles, electronic products, and home furnishings, and promote service consumption such as sports leisure and cultural tourism. This is the important policy orientation and specific measure to solve the current economic structural contradictions and to alleviate the economic contraction.
At present, the fundamental contradiction of China's economic cycle lies in the serious mismatch between supply structure and demand structure. On the one hand, our supply capacity and actual supply are mainly concentrated in the manufacturing industry; on the other hand, the final demand of residents, especially that of urban residents in the middle-income class, is mostly concentrated in the service industry.
The main obstacle restricting China's industrial upgrading is the insufficient supply of modern producer services. To solve this problem, it is necessary to vigorously adjust the supply structure, shift the resources and policy focus towards producer services, and develop new forms of manufacturing services. At the same time, on the one hand, it is necessary to continuously increase income on the demand side and improve the income distribution pattern; on the other hand, it requires to provide residents with affordable and high-quality service products to meet the residents' growing demand for services.
