The Study Of The Encouraging Consumption Policy Effect In China

The harmonious proportion of investment, consumption and export in aggregate demand is vital to the economic development. The investment rate in China has been at the high level for a long period. Since the Southeast Asia financial crisis broke out in 1997, the export demand contributed less to the economics development in China. Currently, China is undergoing the economic system transformation, various deeply buried economic problems have been emerged, such as the unbalance between supply and demand, the effective demand insufficiency has become the main factor that restricts our economic increase. Thus, our government has been taking encouraging demand policies, especially the encouraging consumption demand policies since 1998. In this thesis, I try to evaluate the encouraging consumption demand policies and to analyze if these polices are effective.Although some macroeconomic policies are not made to encourage consumption demand initially and there exists the argument that the macroeconomic policy doesn't comprise the consumption policy, it is undoubtedly that the consumption policy needs the macroeconomic policy such as income policy, rate policy, tax policy etc to realize its goal. In this thesis, the effect of income policy, rate policy, tax policy, social security, consumption credit on the consumption is analyzed respectively. When it comes to the income policy, the urban and rural residents' consumption functions in 1998 and 2004 are set up according to the Friedman's permanent hypothesis and conclusions show that no matter the urban residents or the rural residents in China, they depended their consumption more on permanent, steady income in 2004 than in 1998, it means the income policy have reached its goal to increase the residents consumption to some extent. The followings are the demonstration of other encouraging policies and the current intractable problem in consumption field.In the end, some suggestions are proposed to the continuous encouraging policies, such as enhance the poor residents' income, narrow the income gap between the rich and the poor, adjust the proportion of consumption and investment, construct the integrated social security system, expedite the taxation innovation and accelerate consumption credit system's establishment.