Astudy On Income Distribution Structure Adjustment And Expanding Domestic Demand In China

Since China implemented its reform and opening up policies, the Chinese economy is growing rapidly and the national strength is increasing continuously; especially in 2010, with its economic aggregate surpassing Japan, China ranks the second in the world and attracts the worldwide attention. However, due to the influence from the world financial crisis, various imbalances in Chinese economy have been revealed, such as insufficiency of domestic demand, economic growth fatigue, which are mainly caused by irrational income structure. This study aims to probe into the effects of income distribution structure adjustment on expanding domestic demand in the situation of Chinese economy rapid development.This thesis firstly defines the terms of demand and income and summarizes theoretical literature on consumption and income at home and abroad. These theories shed enlightenment and theoretical guiding towards Chinese income distribution problems in this economic transition period.Afterwards, analyzing the present situation of insufficiency of domestic demand and poorly–structured income distribution structure between urban and rural residents, this study proposes that irrational income distribution is the primary cause of curbing urban and rural residents'consumption and limiting domestic demand. Meanwhile, this paper illustrates the impacts of the irrational income distribution structure on economy: distorting the proportion of consumption and investment; affecting the upgrading of industrial structure; affecting the employment structure evolution; affecting the industrialization and affecting current social harmony and stability.At the end, this paper concludes that adjusting income distribution structure is the basis of expanding domestic demand. Therefore, it holds the suggestion that market and government should take actions to further narrow the gap between urban and rural residents income and raise low-income group's income level through regulatory devices; what's more, accelerating the urbanization construction is essential for expanding domestic demand and keeping economy healthy, sustained and stable.