Abstract: The new development pattern of "dual circulation" is an important shift of China’s economy from a world supply center to a world demand center. However, the realization of this shift faces the challenge of initiating potential domestic demand, which is mainly reflected in the consumption demand relative to the investment demand, the residents' consumption expenditure relative to the government's consumption expenditure, the rural consumption demand relative to the urban consumption demand, and the proportion of service consumption in residents' consumption demand are low. Compared with increasing wages and reducing government expenditures, increasing wealth and income is the key to initiating potential domestic demand in the context of China. In view of this, China should take the development of multi-level capital market as the focus of implementing the policy of expanding domestic demand at present, because the developed capital market can shape the wealth effect of demand, that is, by increasing the real wealth income, strengthening the income increase expectation, improving enterprise performance and other ways, we can promote the substantial increase of residents' consumption level directly or indirectly. In the future, China needs to take the initiative to make strategic adjustments to economic globalization, and carry out economic globalization based on the domestic market to adapt to the new role of international division of labor as the world demand center.
