Infrastructure's Influence On China's Rural Consumers Demand

With the sub-debt crisis in the United States, the spread of the world's economic will slow down. Due to China's exports to world, especially there is a higher degree of dependence on the United States, sub-debt crisis will reduce consumer demand in the United States, which led to our decline in exports to the United States. If domestic consumption is weak, over-supply and the problem of excess production capacity will appear. At this point, how to expand domestic demand and a growing rural consumer market is of strategic significance. Since the 1990s, China's rural consumption market in the whole society share has been hovering around 38 percent, the rural resident's consumption has always been on the low level. China's consumer market in rural areas difficult to start, in addition to the income of the farmers affected, one of the most important constraints is the poor infrastructure in rural areas, which limits the farmer's consumption and upgrade the structure. At present, the domestic scholars in the study of consumer demand in rural areas, ignore the rural infrastructure affect, or they focused on the conduct descriptive, lack of in-depth analysis.This article focuses on the empirical perspective to analysis the influence of the infrastructure on the rural consumer's demand. First of all, we start with the status quo of China's rural consumption, put forward that at this stage one of the factors of the constraints of rural consumer demand is the building of rural infrastructure. Next, we analysis the China's rural infrastructure and the existence of the status quo. On this basis, to explore the ways how infrastructure affects the rural consumers' demand. In the empirical analysis, we use the durable goods of rural residents for example, to make regression analysis by the cross-section measurement data of 31 provinces. We estimate the farmers' demand for washing machines and water penetration in rural areas, farmers' demand for motorcycle and the rate of rural road as well as farmers' demand for telephone and the rate of rural telephone lines. The results showed that infrastructure has a significant positive impact on farmers' durable goods demand, even after controlling income and year variables, the result is still significant. In order to have a further explore on the infrastructure's influence on the consumer's demand, we use difference-in-difference model to estimate the rural power grids' influence on the t farmers' demand. Empirical results show that the rural power grids have a significant role on the changes in the demand for color TV, the conclusion has been proved by other evidence, including controlling of the income of residents and the initial color TV in 1998, the results still strong and significant. The study also shows that rural power grids have a continuing, and incremental impact on farmers' demand.Our research shows that the infrastructure has a significant role of rural residents' consumption, the empirical analysis of the effect of the rural power grids policy also demonstrates that improvement of rural infrastructure has an active role to increase the consumption level of farmers. On this basis, this paper speeds up the policy recommendations to construct the rural infrastructure.