A Study On The Relationship Between Internal And External Demand For Chinese Economic Growth And Income Distribution

The paper based on income distribution, studies both from the theoretical and empirical of relationship between income and external demand, then the relationship between income distribution and domestic demand.This article refers to the narrow concept of external demand will be defined as the foreign market demand for domestic products and services that China's exports; on the analysis of domestic demand is more focused on consumer demand.. In the paper, use the Gini coefficient as a measure of inequality of income distribution indicators, with the export dependence of the index as a measure of external demand, through the correlation analysis and Cointegration test find trade liberalization expands the income distribution. Then according to three sides of Marginal propensity to consume, Average propensity to consume and Precautionary savings motive explain the relationship between income distribution and domestic demand. Use the average propensity to consume as the explained variable, income distribution as explanatory variables, using 1988-2009 data on a sample of the empirical analysis. The results showed that the expansion of the income gap with the community, social average propensity to consume the declining trend appears. The basic conclusion is Excessive dependence on external demand exacerbated by the expansion of income gap, and income gap is further inhibited the expansion of domestic demand, Then excess capacity in our country's need to continue to rely on the foreign market to absorb, resulting in a vicious circle, Lead to internal and external needs to be more uneven. So the recommend will be optimize the industrial structure and narrow the income gap to coordinated the internal and external growth.