Zhejiang Rural Residents' Consumption Level And Consumption Structure Study

The period of the Eleventh Five-Year Plan is a critical phase to lay a solid foundation for the development of China's new socialistic countryside and a critical phase to accelerate the construction of a well-off society in an all-round way. Only if rural residents have a well-off life can we expand domestic demand and promote sustainable development of our national economy. During this critical period, it is of great importance to attach attention on the consumption of the rural residents. Particularly, it is important to scientifically analyze and evaluate their consumption in order to guide their consumption toward a high level.With research data from Zhejiang Province, this thesis delves into the dynamic process of consumption level of the rural residents, the evolution and internal status of the consumption composition and underlying causes. Corresponding policy suggestions are given based on the research.Firstly, the thesis makes a systematic review on the general theory on consumption and findings of resident consumption. Secondly, specific analyses are carried out on the evolution and the present situation of rural residents' consumption in terms of consumption level and consumption composition. Thirdly, by employing relevant consumption functions, the main forms of income of rural residents are analyzed. The expenditure compositions of urban residents and rural residents matched in comparison are quantitatively analyzed using longitudinal time-sequence data and cross section data by employing ELES model. Finally, relevant suggestions are set forth based on the findings of the research to promote the level and improve the quality of consumption of rural residents.The findings of this thesis are as follows:1. As economy develops and income increases, the consumption level of rural residents is improving significantly. The analysis of Engel's coefficient indicates that the overall consumption level of rural residents in Zhejiang Province has already embarked the transition from fairly comfortable living standard toward prosperous living standard. But the APC of them has decreased slightly. The analysis of basic life expenditure indicates that disparity of the internal consumption level between the urban and rural residents is still great.2. The quality of rural residents' consumption has increased, and focus changed. The proportion of food and clothing has remarkable reduction while the proportionof entertainment, communication and transportation has increased greatly. But the expenditure on household appliances, services and health care is insufficient. The consumption composition of rural residents still has to be adjusted.3. The consumption expenditure level rests with spot income and durable income, though the influences from temporality and casualty cannot be wholly ignored. It can be expected that as the income continues to increase, the consumption level will improve and Engel's coefficient will continue to drop.4. The long-term overall MPC of rural residents is higher than that of the urban residents. It has been a long time that the expenditure for rural residents is insufficient. It can be predicted that the rural market will have a bigger potential market than that of urban market.5. The consumption of rural residents has the following features:a) The overall MPC of rural residents is lower than corresponding saving tendency. It is also lower than corresponding overall MPC of urban residents. The precautionary and saving tendencies both are very high.b) The highest consumption tendency is still toward food and living facilities.c) The entertainment and living expenditure of rural residents have an impact of "pressing out" on the other expenditures.d) The expenditure of transportation and communication, entertainment and services and household appliances and services are susceptible to the changes of their prices remarkably.e) In a short term, the effective demand of household appliances and health care won't be too strong. The upgrading of consumption composition is still on the agenda.Base on the above findings, the following suggestions are set forth.1. Economy still needs to be developed to improve rural residents' income level as the foundation of improving the consumption level for rural residents, which includes policies such as developing highly efficient eco-agriculture, developing in non-agriculture industries in the countryside and fostering education and training of rural residents.2. Reform is to be speeded up, and the macro-control should be perfected to make a benign institutional environment, which includes setting up and perfecting the social security systems, the education charges, the supplying composition ofcommodity and services, and reduction of the disparity of the income between urban and rural residents.3. Comprehensive implementation of the eleventh Five-Year Plan should be carried out to promote the development of the new countryside and fostering rural infrastructure construction to create a nice condition for the improvement of the consumption level for rural residents.