| This paper firstly introduces the situation that Chinese urban residents'wealth is growing rapidly but their willingness to consume falls behind. Then the paper theoretically analyzes the variables influencing the residents'consumption, explains the mechanisms that residents'housing wealth, stock wealth and net deposit wealth could influence residents' average propensity to consume.This paper uses the panel data of Chinese 31 provinces from 2002 to 2009 to empirically examine the impact of residents'wealth. The result suggests that the impact of Chinese urban residents'wealth on consumption is different from that of the western developed countries. Taking all the Chinese urban residents into account, the increase of the stock wealth has a significant crowding out effect on residents'consumption, so does the increase of the net deposit wealth. However, the change of the housing wealth has very weak, although positive impact on residents'consumption. It can be inferred that the increase of housing wealth and the ascending house price create both the wealth effect and the crowding out effect. This paper separates the 31 provinces into groups by different criterions. The first separation divides the provinces into eastern, central and western groups. The second separation considers the provinces'GDP per capita. The third separation uses the rates of families renting houses in cities. The fourth separation compares the percentages of public livelihood-related expenditures in the provinces'whole fiscal expenditures. Then the empirical results support the stable crowding out effect of residents'stock wealth on average propensity to consume. In the central and western provinces or the less-developed provinces, the percentage of labor income in the disposable income is positively related to the average propensity to consume. The crowding out effect of housing wealth is very significant in central and western provinces or in the less-developed provinces. But the housing wealth has little impact on the average propensity to consume of eastern or well-developed provinces. Furthermore, the crowding out effect is larger when the rate of families renting houses in cities is higher. Among the provinces, the net deposit wealth always generates the crowding out effect on average propensity to consume, no matter how large is the percentage of residents-related expenditure in the province'whole fiscal expenditure. This indicates that Chinese government does not perform well in providing public education, sanitation and social security.Finally, this paper compares the differences between China and the United States about residents' consumption concept, government's public fiscal expenditure, the development of consumption credit and the development of financial market. Then it gives the reasonable explanation about why the wealth effect doesn't appear in China. |
