Domestic demand-driven economy refers to a form of economy that solely depends on internal circulation, self-sufficiency, and prioritization of domestic market. On the contrary, external demand-driven economy is dependent on external circulation, and production activities mainly for export, which dependence on foreign markets. The two are both forms of economy, and economic activity. Someone might argue that's either-or, just do it. However, two visions are fundamentally different.
Generally, it would be desirable when both the domestic demand-driven economy and the external demand-driven economy exist, and each of them has two economic forms working at the same time. That is the healthiest status in economy. It implies that the economy could be driven by domestic and international dual circulations, and each is in a supplemental manner to the other. Usually, a balanced economy develops along with a model of dual circulation coexisting.
My thinking is what would happen once a scenario comes up with disequilibrium and contingency. What will local policies be in response to? There are many issues to talk about. I like to pick up the following main points, and direct to the discussion. It may help open a policy window.
First, we have learned that the domestic demand-driven economy is an extreme and unbalanced form of economy not to give thought and solve problems step by step. At this moment, classical economic theories would be put away; expertise, modeling, concepts that are universally applicable, and even authoritative economists would not be favored. Common sense of economics remains there, while mindset under the framework of supply-demand balance is a must-have. The world needs a set of new playbooks. Under such a circumstance, more opportunities are right here waiting for new roles and novel scripts.
Second, the economic policies focusing on domestic demand that matters to deal with competition more intense. We can't take for granted that domestic demand-driven economy to meet supply and demand is simplified to a plan. Nothing is simple!
The era of "launching satellite" and "Great Leap Forward" in the late 1950s was engaging with a political ecology at the expense of the national economy to being loyalty to a person, public possession for personal purposes, and personal political future. It appeared one facet of thing. Furthermore, it was like another kind of fierce competition on policies even though one could not expect to do that. Competition is everywhere, not just exists in market economy, but the meaningfulness is different.
Third, regional monopoly. We know "guaranteed supply" as usual along domestic demand-driven economy. Such a trait is critical to nurture monopoly enterprises for goods and services. They are in the center of the process to assure supply and have the "final say" to make decision. To keep these enterprises and establish new ones in various places, which obviously put on local economic priority items. Localities' political status is largely attributed to the formation of regional monopoly.
Fourth, resource limitation is particularly prominent in domestic demand-driven economy. It will lead to unbalanced economic development nationwide. Generally, the political status is higher in resource supply regions, while the economic status is higher in finished-product manufacturing regions. We understand this characteristic, and then make the strategy necessary for the development of local economy that should adapt to local environments. That means to do right thing at the right time, and take flexible measures to resolve cases.
Fifth, special administrative region of Hong Kong and "special zone". There are quite a lot of special zones in China. As the political situation is changing rapidly, the role of SAR has also been different from the past. The Hong Kong SAR will play a key role in domestic demand-driven economy. Hong Kong was standing with a special status in wartime years ago, and it will maintain the same in the future. Other special zones will keep their political environments, not really the same as Hong Kong.
Sixth, it is inevitable that planning departments emerge at all levels in China. From the functions of saving to planning, it will be a matter of course. The ministry-level planning agency has been already there. The State Planning Commission was preceding the National Development and Reform Commission (NDRC), renamed in the governmental reform of 1998. The planning committees at the local level do not disappear. More plans will be done by these administrations.
Seventh, shortage and imbalance will exist no doubt, and likely arise in the deepening stage of domestic demand-driven economy. Nevertheless, it would imply development opportunities that come up, only but requires super-strong capability of forecasting. One may feel impossible to make it. In real world, there is always too much unpredictable around us.
Market economy is regarded as a form of redundant economy, while non-market economy takes efforts to measure one carrot for one pit. Because of different economic manners, the former could achieve it, while the later could not. In domestic demand-driven economy, you should seize opportunities when come across shortage and imbalance. That is not wise to being misconducted to change this situation.
Eighth, the "three major issues" are noticeable again on the horizon. Domestic demand-driven economy focuses on self-sufficiency that shall address "what to be produced", "how to produce" and "for whom to make products". Someone concerns that overproduction and deflation have been emerged, now sales matter. It looks like this, but not simple.
The role of capital is very limited to play in domestic demand-driven economy. I even think of it to be ineffective. Capitalists' popularity is not as much as before. On a theory, it is because that the political power will decide on who gets rich, what to give, and what want to do. If capital is useless, goods might not be accessible in the market, "shortage" will come after to a certain extent and in certain fields. Consequently, production and supply will become difficult. Finally, it comes back to the prior questions of "what to be produced", "how to produce" and "for whom to make products".
In view of the above all, merely, it is an outline of logic, so called a "policy model". The theory that domestic demands drive the economy growth is sort of science, believed Chinese academia, ministry officials, economists, experts as well as classical literature. How can it be successful in practice? Whether is a theory that stands the test of time? That's another matter. I am discussing now on what are differences in domestic demand-driven economy.
Final Analysis Conclusion:
The core characteristic of domestic demand-driven economy is that purely depends on internal circulation, self-sufficiency, and prioritization of domestic market. In case that an economy moves towards such an extreme, it would have profound changes and impacts on both the nation and the region directed to different developmental trajectories.
