The Study On The Impact Of The Expansion Of China's Income Gap On Consumption Demand

China's economic growth relies heavily on the investment and exportation. Among the "three carriages", the inadequacy of domestic consumption demand, especially the residents' consumption demand, can be caused by a variety of factors, the most important one is the expansion of income gap, which is becoming a key factor to constrain China's current economic development. As China is a country with obvious dual economic structure and exceeding unbalance among areas and industries, and also the difference of the consumption that between urban & rural, among areas and industries, is extremely distinct, this article will study on the relationship between consumption demand and the income gap between urban & rural, among areas and industries, and on the relationship between income gap of different stratums and consume structure. Based on the result, we will analyse what and how much does the enlargement of the gap affect the consumption. China's economic growth should depend more on consumption. How could we adjust the income distribution of residents in order to stimulate consumption demand? This is a research topic with important theoretical and practical significance.Firstly, the thesis summarizes the existing research and makes a brief commentary; Next, it presents the subject-selecting background, the study purpouse, significance, train of thought, and methods. Then, the thesis detailed the indicators, which can measure income gap and consumer demand. Based on the elaborate, using multiple indicators, the thesis describes the actual situation and the trend of of the income gap and consumption demand of Chinese residents, the result is that China's overall Gini coefficient and Gini coefficient for rural and Urban areas have basically both risen constantly since reform and opening up, and also,we find that Chinese overall Gini coefficient has already surpassed the accepted international security line:0.4, from the year 1992. Further more, the thesis makes several positive analysises on the relation between the present Chinese residents'expand of incoming gap and the inadequacy of domestic consumption demand. The conclusion is a follows. First, the social average propensity consume will reduce by 0.085 unit when the income gap between rural and urban residents add each unit; Second, there is stable co-integration relation among the consumption of residents, the overall Gini coefficient and the real income growth rate, over a long time; third, Before 1990, the expansion of income gap has expanded role to consumption demand, while the enlagement of income gap can lead to the inadequacy of consumption demand after 1990; Fourth, The income gap among different income groups has significant impact to the consumption structure. Finally, we analyze the causes leading to the enlagement of the income gap, and put forward the proposals for narrowing the gap to expand consumption from four aspects as follows:firstly, the income level of low-income classes should be improved; Secondly, The rapid income growth of the upper-income brackets should be adjusted; Thirdly, the number of the middle income group should be increased; At last, rural-urban income gap should be reduced.