Commertary: Finding a dynamic balance (2)

The key to accelerating investment transformation is to achieve a dynamic balance between investment and consumption in order to enable investment growth to reflect urbanization and the structural changes in aggregate demand of society.

So it is necessary to change the investment structure as quickly as possible to meet the changes in consumption demand. First, investment in public projects has to be increased. In order to adapt to the rapidly growing demand for public goods, investment in education, healthcare and social security should be markedly increased. This will substantially increase people's propensity to consume and effectively reduce the disparity between urban and rural areas.

The second priority is to increase investment in the provision of public goods and services, because, due to the lagging readjustment of the industrial structure, much of the growing consumption demand cannot be satisfied. For example, in the next five years, the added value of China's cultural industry is expected to rise from 3 percent of gross domestic product to 5 percent. If investment in the cultural industry is increased, it will not only change the potential demand into actual demand, but also lead to an upgrading of the industrial structure.

Under market economic conditions, the sustainability of investment depends on whether private capital can provide a greater share of investment. Only when private capital is the main investor can there be economic vitality.

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