China's Accelerating Industrialization Strategy And Its Insufficient Domestic Demand

The outburst of Asian financial crisis was more than ten years ago, and the problem of our insufficient domestic demand has also appeared more than ten years. The researches about this issue were almost never stopped from then on. As our export Shrink sharply once again in 2008, which caused by the global financial crisis that originated from the USA secondary loan crisis, the problem of the insufficient domestic demand was once again become the undisputed focus of the study. People's understanding of the causes of China's insufficient domestic demand was deepening, and the related research literatures were voluminous in this ten years, and our government's efforts in prompting the domestic demand, at least in raising our nation's consumption rate has never been interrupted. However, the explanations for the insufficient domestic demand were still full of dispute and contradiction in the academic circles, and China's domestic demand is still as weak as before, the social consumption rate continues to decline. Therefore, to research the insufficient domestic demand is still a far-reaching and urgent project.Based on the existing literatures, this paper has a new perspective to explore the deep reasons of the insufficient domestic demand and its solution. In my opinion, the insufficient household consumption expenditure and the structural productive capacity surplus are the two sides of the insufficient domestic demand. No matter the Asian financial crisis or the current global crisis is not the fundamental cause of this issue, and the deep reason is the negative influence of China's accelerating industrialization strategy.Through comparing the concept of modernization and industrialization, and considering China's real national conditions, it's sure that the essence of China's modernization is a process of industrialization. Although we abandoned the traditional catch-up development mode, considering the huge gap in social and economic aspects between China and the western developed countries, with the strong sense of historic mission and national responsibility, the modernization strategy our decision-makers adopted is still an accelerating project. In this project, the market-oriented reforms in economy are the basis for the smooth progress of industrialization, while the opening-up and political reforms are the accelerating mechanisms, the three together like one body and two wings.Under the influence of the industrialization acceleration strategy, the importance of economic construction has been raised to an unprecedented political height; the enthusiasm of the local governments to develop economy was greatly mobilized. With the government's great enthusiasm and efforts, China maintain a high investment rate, and have a fast pace in institution innovation; through opening-up strategy, a lot of advanced technologies, equipments, capital was introduced from overseas, and the social productivity greatly improved in a comparatively short term; the efficiency of resource allocation was greatly improved by the market-oriented reforms in economy. In a word, the influence of the industrialization acceleration strategy almost pushed all the four wheels of economic growth, which concluded by Samuelson, and so it's not surprising that China can create the "China miracle" in economic development.However, everything has two sides, while the industrialization acceleration mechanisms lead us to make the "China miracle" in economic development, it also have some negative impact on our social and economic development, for example, the insufficient domestic demand. This is because under the influence of the industrialization acceleration strategy, some behavior preferences of the local governments are inappropriate, such as the addiction to pursue GDP growth, reluctant to develop social welfare, excessive competition in attracting FDI, industry duplication, and so on; On the other hand, due to the great technical gap between China and the developed countries, considering the challenges from the TNC in the process of independent innovation, for the domestic enterprises, compared with the independent innovation, it's more economical for technology introduction. So, the domestic enterprises are reluctant to innovation and indulged in the technology and equipments introduction from the developed countries. Consequently, the mixed-effects of these two factors caused both the insufficient domestic consumption and the duplication of similar projects.As China has become the world's second-largest economic entity, in order to ensure our economy have a sustainable and stabile development, the old economic growth mode which over-reliance on investment and external demand must be transformed. According to the analysis, first and for most, we should change our notion and concept on the economic development, and implement the conception of the scientific outlook on development. Second, we must transform the government's functions actively, and reduce its direct involvement in general economic sphere, strengthen its service functions in socio-economic development, such as improve people's livelihood, promote the domestic enterprises to pursue independent innovation.As this paper has a new perspective to explore the deep reasons of the insufficient domestic demand, so compared with references there are some innovation. First, by comparing the concept of modernization and industrialization, considering China's real national conditions, this paper confirms that the essence of China's modernization strategy is the industrialization acceleration strategy; Second, this paper proves that the two sides of the insufficient domestic demand, the insufficient consumption and the structural productive capacity surplus are have a common incentive, which is originated from the negative influence of the industrialization acceleration strategy; Third, in order to fully explain the main thoughts of my graduate thesis, in the research process this paper introduced the logical reasoning, mathematical proving, game theory and empirical testing method comprehensively.