Abstract: It is pointed out on the 20th CPC National Congress that it is necessary to fully, accurately and comprehensively implement the new development concept, adhere to a high-standard opening-up, and to accelerate the establishment of a“dual circulation”development pattern in which domestic economic cycle plays a leading role with domestic and overseas markets complementing each other. Demand-side reform plays a role that cannot be ignored in the new development pattern, and improving the consumption level of Chinese residents is the focus of the reform. By using the panel data of 31 provinces in China from 2013 to 2021 to build a spatial Dubin econometric model we analyze the factors influencing resident consumption, and find that improving resident income, urbanization and medical treatment can not only promote the consumption level of residents in the province, but also drive the consumption level of residents in neighboring provinces. Therefore, under the new development pattern of domestic circulation in China, consumption level of Chinese residents will be improved by continuing to promote urbanization, and to narrow the income gap between urban and rural residents, and by enhancing and optimizing the social security system.

Key words: domestic economic cycle, demand-side reform, the new development paradigm, resident consumption, spatial spillover effect