China's Consumption Rate Study

In order to accurately understand the status of China's consumption rate and reasons for changes in it, to figure out how to improve it if necessary, we need to conduct a comprehensive, systematic, in-depth study on China's the consumption rate. In the related theoretical frameworks, this paper collects and consolidates China's time-series data since 1978 and global data since 1960, uses integrated mathematical models, and carries out empirical research on issues related to China's consumption rate. Under dynamic conditions, this first part of the general equilibrium framework studies the consumption rate in the economy's role, including the relationship between the consumption rate and economic growth, the consumption rate and economic structure, and economic efficiency; the second half of the partial equilibrium framework studies the composition of the consumption rate, including relationship between household and government consumption rate, and the structure factors of household consumption rate.The empirical results of consumption rate and economic growth are basically confirmed to Chenery standard consumption rate trends, and there are three extensions. Fundamentally speaking, the international economic structure of high-income countries focusing on consumption while some countries focusing on production, has led to economic growth in the change trend in consumption rate. In the framework of neoclassical economic growth, the theoretical dynamic relationship between consumption rate and investment rate is derived. The net export rate both directly and indirectly increases the impact on the consumption rate, which make the dynamic relationship between the investment rate and the consumption rate different among different countries. In the framework of neoclassical economic theory of dynamic efficiency and on the basis of AMSZ criteria, there are empirical findings: Since 1978, China's overall dynamic efficiency has increased, through three phase of dynamic invalid, dynamic effective and dynamic weak effective, and three major trends of decreasing, increasing and then decreasing again. And China's consumption rate and economic efficiency are positively correlated.In a typical neo-classical economic analysis framework, the introduction of Keynesian absolute current disposable income finds out that the dynamic effects of China's government consumption on household consumption start to crowd in and then crowd out more. The Chinese government's special relationship with the consumer is determined by the structure of government consumption. Applying the theory of consumption structure decomposition method to the data of China's, it's found that in the long term the decline of in consumption tendency is the main reason for the drop in consumption rate. The main background is in the market of the welfare system reduced consumption, while household savings increased.International economic structure and China's domestic economic development stage are the main constraints for the China's consumption rate. But the condition needs to be improved, and the implicated policies include: First, accelerate human capital accumulation and improve the quality of economic growth. Second, improve the consumption and investment systems, to enhance economic efficiency. Third, speed up the social security system to increase the propensity to consume and reduce uncertainty. Finally, promote public administration reform, and accelerate the transformation of government functions.