Shift in Investment Logic: Low Prices Drive Returns

The recent phrasing from the National Bureau of Statistics is worth a second look. On May 19, it released data and stated in plain terms that overall price levels remain low, creating pressure on business operations and household income growth—so the next phase must focus on further expanding investment demand. That runs counter to conventional intuition: many assumed low inflation called for boosting consumption, but the official answer is to push investment harder. What does this signal? The economy’s recovery may need to accelerate, and the thinking at the top has shifted.

A quick extension: underneath this lies a fundamental rebalancing of domestic demand. The consumption-led growth model we relied on hit a wall in the stock-phase era, while investment is now emerging as the new engine. High-tech industry investment grew by more than 20%, and information services surged over 40%, filling the gap left as real estate stepped back. The main effect of rate cuts is also aimed at activating investment rather than consumption—manufacturing net margins are thin, so interest-rate spreads matter far more for investment decisions than they do for household spending. This pivot follows the historical pattern of catch-up economies: short-term outcomes are driven by demand, but long-term strength comes from supply.