After decades of rapid economic development in China, social productivity has been able to basically meet the people's material needs. Therefore, compared with the mismatch of supply and demand in the primary stage of socialism, the biggest difference of the current supply and demand mismatch is that the focus of the main social contradiction has shifted from "how to survive" to "how to live". The current Chinese residents' demand for non-essential goods is growing rapidly, and the supply structure cannot adapt to the demand structure. This contradiction between supply and demand is a concentrated manifestation of the main contradictions in the new era of socialism with Chinese characteristics, and it has also led to the overflow of a large amount of non-essential goods.The mismatch between supply and demand can be largely attributed to the low production efficiency of state-owned enterprises, credit constraints and subsidies. Among them, the former belongs to internal distortions, while the latter two belong to external policy distortions. The problem of mismatch between supply and demand is essentially the fact that quite a few policy distortions have appeared on the supply side, causing supply to fail to adapt to changes in the demand structure. Alleviating the contradiction between supply and demand requires improving the production efficiency of state-owned enterprises, as well as removing the distortion of credit constraints and subsidies.
