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Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

Postal Subscription Code 80-978

Front. Econ. China    2009, Vol. 4 Issue (4) : 526-547    https://doi.org/10.1007/s11459-009-0028-x
Research articles |
An inquiry into the causes of inadequate household consumption in China—An analysis based on provincial data of urban and rural China
FANG Fuqian,
School of Economics, Renmin University of China, Beijing 100872, China;
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Abstract This paper uses Chinese urban and rural panel data for 30 provinces, autonomous regions and municipalities (except Tibet and Taiwan) on the consumption of Chinese urban and rural households in 1995–2005, by constructiong a random effect model, to analyze the impact of sources of household’s consumption demand on the Chinese economy. The quantitative analysis reveals that the per capita disposable income of households is highly relevant in explaining households’ per capita consumption expenditure, in these eleven years, and that China’s consumption function was fairly stable. On the basis of flow of funds accounts (barter transaction) data in 1992–2004, the paper further reveals that, since 1997–1998, China’s consumer demand remains in the doldrums because of the following distribution and redistribution process of the national income: The Government’s share of total income and disposable income is becoming ever larger, while the share of households is declining. Aside from the result that a rise in the burden of personal tuition has a negative impact on per capita consumption demand for urban households, we have not found that housing reform or medical expenses significantly reduce consumer demand in China. We believe that low household consumption demand is caused mainly by the income redistribution between households, government, and corporations rather than the inequality in income distribution across households.
Keywords Chinese households      average consumption      average income      income distribution      
Issue Date: 05 December 2009
 Cite this article:   
FANG Fuqian. An inquiry into the causes of inadequate household consumption in China—An analysis based on provincial data of urban and rural China[J]. Front. Econ. China, 2009, 4(4): 526-547.
 URL:  
http://academic.hep.com.cn/fec/EN/10.1007/s11459-009-0028-x
http://academic.hep.com.cn/fec/EN/Y2009/V4/I4/526
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