China's economy has maintained a positive growth despite the impact of COVID-19. However, the consumer spending has not recovered naturally as people expected the epidemic under control and economic recovery. Last year, the overall income of Chinese residents decreased by about 1.7 trillion yuan, and household savings for the whole year increased by 1.6 trillion yuan compared with the same period in 2019, showing a situation of declining consumption tendency and rising saving rate. The annual consumption showed negative growth for the first time since the reform and opening up. The epidemic situation is only a sudden factor leading to the decline of consumption. It is necessary to explore the medium and long-term factors behind the "squeeze at both ends" of the continuous slowdown of residents' income growth and declining consumption tendency in recent years, so as to find an effective policy direction to expand domestic demand and promote consumption. This is also the key to smooth the domestic circulation and connect domestic and international markets with domestic demand. In the short run, the slowdown in consumption growth is due to the severe impact of the epidemic and insufficient relief policies. In the medium and long term, this is due to the continuous decline in residents' income growth and consumption propensity in recent years, as well as the long-term emphasis on investment in the system and macro policy. Therefore, we need to adjust the focus of our policies to stimulate the consumption vitality of residents.
