Under the new development paradigm, implementing a strategy to expand domestic demand is an essential prerequisite for ensuring the smooth circulation of the domestic economic cycle. From a theoretical logic perspective, domestic consumption serves as the impetus for production, the fulfillment of production objectives, and the driver of social reproduction . In terms of contemporary characteristics, under the new development paradigm of the new era, the strategy of expanding domestic demand serves as the fundamental guideline for achieving common prosperity, the practical foundation for constructing the new development paradigm, a key component of high- quality development, a strategic pillar for a modern industrial system, and the internal engine for accelerating technological innovation. Therefore, it is imperative to understand the profound significance of the strategy to expand domestic demand, focusing on key areas such as the development of a modern industrial system, the optimization of income distribution, the deepening of institutional and systemic reforms, and the continued expansion of high level opening up, to promote the healthy, stable, and sustainable development of the Chinese economy.

Implementing the strategy of expanding domestic demand is an inevitable choice for accelerating the formation of a new development paradigm, while optimizing the consumption structure serves as a crucial pathway to expanding domestic demand. Its strategic value has become increasingly prominent in driving economic structural transformation and achieving high-quality development. This paper focuses on analyzing the theoretical logic, practical basis, and implementation pathways through which the optimization of consumption structure contributes to expanding domestic demand. There are three findings. Firstly, the theoretical logic by which the optimization of consumption structure aids in expanding domestic demand lies in the upgrading of demand hierarchies, linkages with industrial structure, and innovation-driven development. Secondly, the practical basis for optimizing the consumption structure to support the expansion of domestic demand includes sustained growth in household incomes, a continuously increasing share of service consumption, ongoing release of demand for upgraded consumer goods, and the synchronization of urban and rural consumption structures. Thirdly, the implementation pathways for optimizing the consumption structure to help expand domestic demand involve enhancing residents ’ consumption capacity and confidence, meeting and creating new demand through innovation, improving institutional safeguards and optimizing the consumption ecosystem, and seeking breakthroughs in key areas while fostering new engines for driving consumption growth. This paper not only provides policy suggestions for expanding consumption demand and improving economic quality and efficiency, but also offers important references for enhancing people’s well- being.

At present, strengthening the coordination between fiscal policy and monetary policy is China’s primary means of expanding domestic demand. Identifying the optimal policy mix is crucial for improving macroeconomic regulation and pursuing progress while ensuring stability in China’s economic development. Under the Rubin Causal Model (RCM) framework, this paper employs a semi-parametric method that combines propensity score weighting with local projections to identify China’s fiscal and monetary policy mixes from 2000 to 2020 and to estimate their impact on economic growth and financial risks. The results indicate that the mix of proactive fiscal policy and prudent monetary policy performs best in balancing multiple objectives, such as stabilizing growth, preventing risks, and expanding domestic demand. Further transmission mechanism analysis reveals that this policy mix drives real consumption and investment through income and expectation channels . Meanwhile, it promotes economic growth and constrains credit expansion to reduce macro-leverage ratios, effectively preventing and containing financial risks. This paper provides a quantitative basis for strengthening the coordination of fiscal and monetary policies, offering more precise policy choices and feasible paths for pursuing economic progress while ensuring stability. In the long run, barring extreme external shocks, the mix of proactive fiscal policy and prudent monetary policy remains the primary choice for China to coordinate stable growth and risk prevention. If short- term economic pressure necessitates phased adjustments to the policy mix, attention must be paid to the dynamic coordination of aggregate and structural tools to improve the precision of policy regulation.

Strengthening consumption’s fundamental role in economic development requires an adaptive transition of demand-side growth drivers from an investment-driven economy to a consumption-led economy. Against the backdrop of a relatively low consumption rate, expanding consumption promotes the formation of a consumption-led economic development model by facilitating economic circulation, stimulating economic growth, guiding resource allocation, and generating scale advantages. Building on a clarification of the scientific connotation of a consumption-led economy, this paper develops a consumption-led economic indicator system and constructs a consumption-led economic index to evaluate consumption’s fundamental role in economic development. The research results indicate that a consumption-led economy represents the primary direction of transformation in economic growth drivers: As economies evolve, consumption-led economic characteristics become increasingly pronounced, and a growing number of countries exhibit such characteristics. These characteristics are particularly evident in developed countries, most of which have already transitioned to a consumption-led economy. By contrast, newly industrialized countries and general industrialized countries display weaker consumption-led characteristics and predominantly follow either a domestic demand-led or an investment-driven economic development model. In light of China’s development practice, the country as a whole remains at the stage of a domestic demand-led economy. Given substantial regional disparities within the country, different regions should promote an adaptive transition of economic growth drivers toward a consumption-led economy in accordance with their specific economic conditions.

This paper measures the degree of organic integration between expanding domestic demand and deepening supply-side structural reform in China. It examines the effects of this integration on China’s economy, analyzes its driving factors, and proposes policy recommendations to promote it. The findings indicate that in recent years, the organic integration between expanding domestic demand and deepening supply-side structural reform in China has experienced a phased decline, adversely affecting output, consumption, prices, and net exports. Enterprise-level influencing factors include the industrial capacity utilization rate, operating costs of enterprises above designated size, leverage ratio of non-financial corporations, and gross capital formation. Other influencing factors include household consumption, real estate development, and infrastructure development. To foster the organic integration between expanding domestic demand and deepening supply-side structural reform and promote China’s economic development, it is recommended to guide enterprises to increase investment, raise the capacity utilization rate, lower operating costs and leverage ratios, enhance the level and quality of household consumption, optimize the housing market structure, and strengthen infrastructure development.