The Research Of The Effect Of Our Esidents’ Income On Consumer Demand In China

Consumption, investment and net exports are the "Troika" to promote economicdevelopment. In accordance with the basic principles of economics and internationalempirical data, the troika of economic growth, its contribution to the size of the orderof consumption, investment and net exports, but in China in recent years, the actualsituation of economic operation, the economic growth mainly depends on stronginvestment driven, consumer-driven showing a declining trend, consumption hasbecome the weakest link in the "troika".Based on the deepening of reform of China’s market economy, accelerate thetransformation of economic development as well as the consumer, March14,2011,the fourth meeting of the Review of the11th National People’s Congress and adoptedthe State Council,"Chinathe12th Five-Year Plan, the People’s Republic ofEconomic and Social Development, just to highlight to establish long-termmechanism to expand consumer demand. Expand consumer demand as a strategicfocus on expanding domestic demand, deepen the reform of the income distributionsystem, the implementation of the strategic priority for employment by actively andsteadily promote urbanization to improve the social security system and create afavorable environment for consumption, increased consumer capacity, improveconsumer expectations, promote the upgrading of consumption structure, and furtherrelease the consumer potential of urban and rural residents, and gradually make ofChina’s domestic market, the overall size of the largest in the world.In this paper, a normative analysis and empirical analyzes of combiningresearch methods, to select China’s30provinces and cities as the object of study,research focused on the premise of the marginal propensity to consume and theincome elasticity of the same level of income and consumption demand.Analysis section of the specification, the first of China’s market economicsystem and economic development patterns were elaborated on this basis, China’sincome growth slow and insufficient consumer demand analyzes the status, the studyfound that China’s urban and rural residents’ income growth ratelower than the GDP growth rate, especially in rural areas, its growth rate is far lower than the GDP; theconsumer all day showing the trend of gradual growth, but consumption of urbanand rural residents not synchronized development phenomenon, the growth rate ofthe two farlower than the GDP, residents of final consumption rate showed adeclining trend, the residents’ propensity to consume will be reduced year by year, aserious impact on China’s domestic demand growth. Using panel data profile andcross section of Chinese residents’ income and consumption growth comparison.In the empirical analysis section, using the panel data cointegration analysis ofChina’s30provinces and cities in residents’ income and consumption, therelationship between income and consumption demand and income elasticity and themarginal propensity to consumeand discussion. The results show that: China’slong-term stability of the cointegration relationship between income and consumerspending. And developed countries, the marginal propensity to consume and theincome elasticity is very low; comparison and towns, the rural lower. The marginalpropensity to consume is low not because of higher income residents, but theinstructions: First, our residents can lower levels of disposable income. Disposableincome is the main factor to determine the level of consumer spending, anyconsumer of the people are above the levels of disposable income, lower disposableincome can only bring lower consumer spending. Second, the savings awareness ofthe urban and rural residents in China is still very strong, for most of the people interms of personal life, they are still willing to put money in the bank to prepare foremergency needs; Third, in the process of economic and institutional change inChina more and more, people are faced with uncertainties, the possibility ofunemployment has continued to grow in the social security system is far fromperfect today, it is not too much consumption. Fourth, as households face liquidityconstraints, exacerbated by the trend of their excessive savings. In contrast, urbanresidents enjoy social security than in rural areas to facing liquidity constraints less,and therefore their consumption is more positive attitude.