Song Ligang, Wu Jiang and Zhang Yongsheng

This paper explores, from the perspective of general equilibrium, the relationship between urbanizing migrant workers and increasing domestic demand. Why should China adopt the strategy of relying on domestic demand to develop its economy? Countering the impact of declining external demand is only a temporary reason for doing so, and the more fundamental reason is the need to change the “dual imbalance” in today’s economy: the imbalance between internal and external economic arrangements and the industry structural imbalance, as well as the need to take full advantage of the domestic market to achieve the goal of industrialization. The latent consumption demand of migrant workers will be fully released if realistic measures are taken to accelerate the pace of turning migrant workers into urban residents. This will help neutralize the negative impact of reduced external demand, as well as rectifying the structural imbalances in the Chinese economy and upgrading China’s industrialization and urbanization.

Keywords: urbanization of migrant workers, increase in domestic demand, Chinese economy

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