Abstract: Since 2020, China’s manufacturing sector has experienced rapid growth in both investment and exports. However, the profitability of this sector has been declining, with prices facing downward pressures. This phenomenon illustrates the fact that “the end of supply is demand.” On one hand, when production increases rapidly without a corresponding surge in demand, a drop in prices is inevitable; on the other hand, the structure of demand influences the level of supply. The share of manufacturing in GDP does not continuously increase with income growth but stabilizes within a certain range. Key factors driving demand include income, real interest rates, certainty, and “goodwill,” as encapsulated in the idea that the end of demand is human nature. Expanding domestic demand can contribute to achieving a more balanced trade relationship.
