Think Tank

Promote a virtuous cycle of supply and demand in the service industry

2026-01-15   

The service industry is an important part of the national economy, and its development is key to the critical process of upgrading the consumption structure, and affects the overall layout of the adjustment and optimization of the industrial structure. The Central Economic Work Conference emphasized "insisting on the dominance of domestic demand and building a strong domestic market" and proposed "releasing the potential of service consumption" and "formulating a service industry expansion and quality improvement action plan". At present, China's consumption structure is upgrading goods consumption to service consumption, and the industrial structure is also transforming towards the service industry. The space for growth on the demand side and supply side of the service industry is very broad and its role as the focus of the next step to expand domestic demand strategy is increasingly highlighted. It is necessary to grasp the dual trend of the increase in the proportion of service and the transformation of the industrial structure towards the service industry, to release the huge potential of service consumption with all efforts, and to promote the service industry to develop in the direction of quality and high efficiency, and to enhance the matching of service supply and residents' demand through the coordinated efforts of supply and demand, so that the service industry can become an important support consolidating the foundation of domestic demand and driving high-quality development.

Looking first at the structural transformation of consumption towards services. This emphasizes the need to follow the trend of rising consumer spending levels, expand the of high-quality services to meet diversified and personalized needs, and activate service consumption to drive effective investment and expand employment capacity, thus forming a virtuous cycle of supply and demand
On the one hand, the upgrading of service consumption can drive the continuous optimization of the supply system. As residents' demand for a better life upgrades, service consumption demand broken through the traditional functional satisfaction category and is advancing towards quality, individualization, and emotionalization. This transformation of demand structure, through market transmission mechanisms, forces the supply side to out systematic optimization. In the field of living services, the upgrading of demand for elderly care services has driven elderly care institutions to accelerate the introduction of intelligent wearable devices, health data systems, and other technological applications, promoting the standardization of service processes and the precision of care services, and realizing the iterative upgrade of supply quality; the upgrading of cultural and consumption demand has given birth to consumer forms such as cultural and tourism experiences based on virtual reality technology, immersive theme performances, etc., which have forced cultural and tourism service providers to innovation investment and accelerate the expansion of supply scenarios and the reform of service models. This demand-driven supply optimization has pushed the service supply system to transition from scale expansion to quality improvement significantly enhancing the adaptability and resilience of the domestic demand market. 
On the other hand, the strong growth of service consumption can effectively pull the investment of related industries and create multi-level employment, and amplify the effectiveness of the growth of domestic demand through industrial linkage. From the perspective of sub-sectors, the expansion of health service consumption not only directly drives growth of core industries such as health management and rehabilitation care, but also leads to the expansion of investment and consumption in related industries such as medical equipment research and development manufacturing and health processing; the upgrading of cultural and tourism service consumption effectively activates the development vitality of supporting industries such as transportation and logistics, and accommodation and catering, and creates a large number employment opportunities. The employment-driving effect of the service industry continues to improve the residents' income level, further providing power for the expansion of service consumption and the growth of domestic demand and then helps to form a virtuous cycle of "industry growth-employment and income increase-consumption expansion".
Let's look at the structural transformation the industry towards the service industry. This emphasizes conforming to the law of industrial evolution, and comprehensively enhancing the overall competitiveness of the economy by improving the quality and efficiency of service industry.
The service industry is not only a "reservoir" for absorbing employment, but also a "booster" for improving efficiency and technological innovation. them, the transformation of the production service industry towards specialization and high-endization has become the key driving force to empower industrial upgrading and activate effective investment. Driven by technological, production services such as R&D and design, industrial software, information service, and supply chain finance are accelerating iteration and upgrading, which provides a solid support for the transformation and of manufacturing industry, promotes the steady progress of "Made in China" to "Created in China", and continues to pull the investment demand of the industrial chain upstream and downstream. is worth noting that with the in-depth development of the market-oriented reform of data elements, emerging service fields such as data rights confirmation, circulation, and transaction are accelerating development, driving the rapid growth of investment in data centers and computing centers.
The upgrading of life services towards convenience, quality, and intelligence is key to stimulating high-quality service supply and expanding its capacity. the field of eldercare and childcare, by improving policy support mechanisms and guiding social capital to participate deeply, new service models such as smart eldercare and "Internet Plus Nursing" accelerating the cultivation and promotion, accurately matching the diverse needs of families for childcare and eldercare; in the field of education and medical services, by relaxing market access and strengthening the of digital technology, new formats such as online education and telemedicine are emerging continuously, significantly improving the accessibility and experience of services. The continuous expansion of high-quality service not only directly promotes the growth of service consumption but also steadily enhances residents' confidence in consumption, laying a solid foundation for the sustained release of domestic demand.
The integrated development the service industry with multiple industries, especially its deep integration with manufacturing, agriculture, and the digital industry, can continuously give birth to new formats, new models, and create diversified scenarios, expanding the boundaries of growth. For example, the "agriculture   culture and tourism" model has led to the vigorous development of rural tourism and leisure agriculture, effectivelyating the vitality of the rural domestic demand market; the deep integration of "manufacturing   service" has pushed enterprises to transform from single product sales to "product   service comprehensive solution providers, greatly expanding the space for industry value-added. This kind of integrated innovation practice not only cultivates and expands the incremental domestic demand through new formats but alsoulates the potential of domestic demand through structural optimization and improves the quality and sustainability of development.
Overall, whether it is the transformation of consumption structure towards service consumption or the transformation of industrial structure towards the service, it essentially reflects the dynamic synergy between demand-driven and supply-side upgrading. From the demand side, the accelerated shift of the focus of consumption towards the service sector is direct reflection of the improvement in the quality of residents' consumption demand, and it also opens up a continuously growing market space for the expansion and quality improvement of the service industry. From supply side, the pace of transformation of the industrial structure towards the service industry is accelerating, and the service industry supply system is constantly improving. It can not only precisely connect and effectively the current service demand in the process of upgrading, but also actively create new consumption scenarios and lead new demand directions through business model innovation and iteration. The joint efforts of both sides the promotion of both sides provide a solid and lasting driving force for the continuous expansion of domestic demand and the improvement of economic quality.
In the context of the accelerating transformation of consumption structure towards service consumption, efforts to expand domestic demand should be systematically laid out around areas such as basic people's livelihood, quality upgrade, scenario innovation, and environmental improvement. should focus on the people's livelihood shortcomings in education, medical care, and childcare, improve the inclusiveness of service consumption, promote the increase in income for low- middle-income groups, reduce consumption concerns, and stimulate potential demand; we should also aim at the direction of quality improvement in life services and deeply tap into the space for the of quality consumption. At the same time, we should accelerate the innovation of service consumption scenarios, create distinctive scenarios close to residents' lives, and inject new vitality into service consumption strengthen infrastructure and element support, and comprehensively build a good ecology for the sustainable and healthy development of service consumption by improving industry standards, optimizing fiscal and taxation financial policies, and perfect consumer rights protection mechanisms.
In the context of the accelerating transformation of the industrial structure towards the service industry, efforts to expand domestic demand should anchor the goal of "optim supply and deepening integration", focus on key points, and break through in coordination. Firstly, we should promote the quality upgrade of the producer service industry, push the industry towardsization and high-end, precisely empower the intelligent transformation and green transformation of manufacturing, and activate the investment vitality of the industry. Secondly, we should promote the improvement and quality of life services, focus on key development areas, make up for the shortcomings in the supply of people's livelihood services, and expand the supply of high-quality services. Third, we should deepen the deep integration of digital technology and the service industry, promote the cross-border integration of the service industry internally and with agriculture and manufacturing, cultivate new formats as live e-commerce, develop new models such as unmanned retail and remote services, create new scenarios such as immersive consumption and flexible services, and expand new spaces for domestic through integrated innovation.

Edit:Luoyu Responsible editor:Zhoushu

Source:ECONOMIC DAILY

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