A Study On The Underestimation Of China’s Household Consumption Rate:a Hypothesis

China’s household consumption is always a hot topic, literature on this topic is sufficient. In all of the studies, the most important point is that China’s household consumption rate is low. We can find most of the literature are around to explain why the consumption rate is low, put forward policy recommendations on how to raise China’s household consumption rate, demonstrate a reasonable interval of China’s household consumption rate. And all of these topics, they have an implicit precondition is that China’s household consumption rate is really low. Without this precondition, it would not have been so much of the studies on China’s household consumption. However, this study is to challenge the premcondition. The author observed a paradoxical phenomenon,in the statistical data,China’s household consumption rate level is very low, even in the long term,in more than 200 countries around the world rankings, the level of China’s household consumption rate ranked 190 away, and according to the trend, China’s household consumption rate level over the past two decades has been in a state of decline. On the other hand, we see the real life appears a complete departure from the data of China’s very low household consumption rate. The author found in the real world experience, China’s consumption are very strong, whether it is in a big city or small city, China’s various markets often prosperous. And according to the author’s further analysis,on the car, computer, mobile phone, oil, gold, luxury, seafood, outbound tourism, meat consumption,China are in first place in the world. It should be pointed out that the list of these consumer product categories is just a microcosm of China’s strong consumption. Therefore, we find a contradiction between theory and reality, this is the initial writing motivation and entry point of this paper.Therefore, the main point of this paper is that, China’s household consumption is underestimated.We’ve already talked about China’s low household consumption rate is the logical starting point for study China’s consumption issue, a voluminous literature are based on this implicit prercondition.If the point of this article is true, then for the entire China’s consumption studies, the basic logical premise changed, so all the conclusions need to know again. From this point, the author believes that the paper’s study possesses great innovation and challenge.The first task of this paper is to prove China’s household consumption rate is underestimated, it is also the most important task of this paper. The author uses the international transverse comparison and the domestic longitudinal comparison to demonstrate. On the one hand, according to the existing research literature,the author selects important variables of affecting a country’s consumption as reference variable, and around the world,choose very similar countries with China in these variables to compare.Our reasoning logic is,if the study on the impact factors of a country’s consumption is effective, we select several major variables to compare,if these countries are more consistent in the key variables, we have reason to believe that their household consumption rate should be in a similar interval.Conversely, if the comparison of several countries trend to be relatively consistent in these key variables, but a country in household consumption rate is larger deviation from the level of other countries, so we think the country’s consumption rate is underestimated or overestimated.Our comparative results demonstrate the level of China’s household consumption rate is underestimated. On the other hand, we also a domestic longitudinal comparison.We believe that the indexs reflect China’s consumption in addition to household consumption, there are also total retail sales of consumer goods.From the statistical method, the index of household consumption expenditure is indirect index, is based on the household survey and supplemented by indirect derive conclusions.As for the total retail sales of social consumer goods and tertiary industry, it is a direct statistical data. These two sets of data on the reliability is not the same, we believe that the reliability of statistical data directly is much higher than the reliability of the indirect statistics. So, we use reductio ad absurdum, by comparing the growth rate of direct and indirect data to disprove the China’s household consumption rate is underestimated. In the domestic we choose total retail sales of social consumer goods and material consumption for comparison, the tertiary industry and service consumption for comparison, the result shows, the annual average growth rate of total retail sales of social consumer goods and the tertiary industry growth rate after the adjustment is about 3% higher than the material and service consumption, this is a huge gap for the growth rate excluding the price factor. Therefore, we think when there is a contradiction between the direct and indirect indexs, the indirect index is underestimated or overestimated. Based on the conclusion of the two groups comparisons, We can prove our point that China’s household consumption rate is underestimated.The second task of this paper is to analyse the causes of China’s household consumption rate underestimated. The causes of China’s household consumption rate underestimated summarized as:the investing of household consumption, the enterprization of household consumption the and the public funds of household consumption. To be specific, the investing of household consumption means in the process of public investment, quite a number of investment amount and wealth are transferred to private because of corruption, then private income informed. As we all know, there are many layers of subcontract in China’s engineering construction, and in essence, the subcontract is a process of privatization of public wealth. The grey income generated from these investments corruption is, in fact, private income. Quite a number of these incomes will be transformed into private consumption. But from a statistical point of view, these private consumption is actually included in the investment. While the realization of enterprization of household consumption is mainly through the grey cost. As is known to all, there are lots of rent-seeking behaviors in China’s market economy. For companies, quite parts of the cost have no direct relationship with the enterprise production cost, we call them grey cost. 。 Grey cost of this type is usually in the form of private. For example, the enterprise pay or purchase gifts for private. At the same time, the enterprise will usually include these costs into enterprise management costs and expenses for its own sake. Thus, much private consumption eventually becomes the enterprise cost and purchase. It will obviously leads to the underestimation of China’s household consumption rate. the public funds of household consumption means the widespread consumption of public funds in China can cause household consumers underestimated. In fact, China has a long history of widespread Reimbursement of public funds, through the reimbursement system, staff working in government departments often own all kinds of private consumption into public account, which changed to the government spending or government costs. This is what so called "Do not use basic wages" 。 In this case, each staff has completed a large number of private consumption, but all these are counted as government spending, this led directly to the ratio of consumption to be underestimated. Therefore, through discussion of investing of household consumption,the enterprization of household consumption and the public funds of household consumption, the author thinks we basically explains the main causes of China’s household consumption rate underestimated.According to the logic of a complete study, we also need to discuss solutions or strategies to solve the underestimated China’s household consumption rate. In this paper, from the three causes of consumption rate underestimated to start, put forward countermeasures of three aspects:control the investment of corruption, improve the whole social credit system and audit system, strengthen the management of the Three Public Consumptions. Through the efforts of these three areas, I believe that can effectively alleviate the level of China’s household consumption rate underestimated.Finally, based on the viewpoint that China’s household consumption rate is underestimated, the author puts forward three policy recommendations. For a long time, China has been criticized for investment dependence, and considered to exist investment overheating,even derived theory of China’s economic collapse according to this viewpoint. The author thinks, consumption rate and investment rate has a high negative correlation, is a trade-off relationship. If this article is more rigorous proof of China’s household consumption rate is underestimated, from a logical point of view, China’s investment rate has the possibility to be overestimated.Clarified the relationship, there will be a new conclusion on the so-called China’s investment overheating. According to our estimate, China’s real household consumption rate should be around 50%, with an average overestimation of 15%.According to this logic, our investment rate is likely to be overestimated by more than 10%. In this way, China’s investment rate becomes more normal, consistent with other emerging developing countries, the conclusion of China’s investment overheating will collapse of itself.With the understanding of China’s household consumption rate is underestimated, we can revisit the relationship between investment and consumption in China. For a long time, we have put forward policies to stimulate consumption and domestic demand, but from the results, these policies of stimulating domestic demand did not get a good achievement. In fact, a national household consumption rate is relatively stable, China is not a serious problem of inadequate consumption if China’s real level of household consumption rate reached about 50%, therefore, China’s policy recommendations to stimulate consumption will fail. A derivative of the proposition is that China needs to continue to rely on investment to complete our process of urbanization in the future.Finally, the author also analyzes the path selection of Chinese manufacturing in the background of underestimated household consumption rate.We know that China’s manufacturing industry faces to de-industrialization process, a key factor in the ability to achieve positive structural de-industrialization process is that China’s domestic demand for China’s manufacturing sector could undertake. In fact, China’s consumer demand is very strong, Chinese manufacturing enterprises need to do is to constantly improve their own core competitiveness, to recapture the market from the hands of foreign-funded enterprises.