Urbanization is the key to build a complete domestic demand system. According to the logical sequence of “what，why and where”，this paper reviewed firstly China’s urbanization process. Through multi model comparison，it was predicted that China’s urbanization rate would reach 67.21% in 2025，with huge domestic demand market potential，and made a benchmarking study with the five developed economies. Then，it constructed a theoretical model of two regions，two elements and two departments to analyze the theoretical mechanism of urbanization and expanding consumption and investment. Using the panel data of the whole country and 31 provinces，this paper analyzed the relationship between urbanization and consumption and investment. Urban agglomeration is the main form of China’s regional space in the future. The main area of domestic demand market should be composed of core urban agglomeration with strong attraction，close economic and social ties and bearing future leading industries. Based on the urban population flow，the degree of economic and social connection within the urban agglomeration and the layout characteristics of artificial intelligence related enterprises，it was judged that the main area of the domestic demand market in the 14th five year plan period would be composed of five urban agglomerations such as Beijing Tianjin Hebei，the Yangtze River Delta，the Great Bay area of Guangdong，Hong Kong and Macao，Chengdu and Chongqing and the middle area of the Yangtze River. This spatial pattern has the advantages of “large dispersion and small aggregation”，and was the key support area for building China’s domestic demand market.