Analysis On The Effect Of China’s Urbanization To Residents’ Consumption

As the degree of globalization of the world economy deepened, increasing the risk of theinternational market，resulting in increased difficulty of exports，industrialization，urbanizationand modernization requirements to accelerate the demand of the domestic market further．Atpresent，China’s urban consumer market has become saturated，but it contains a huge rural marketpotential．Urbanization is the historical task of China’s modernization，but also where the greatestpotential for expanding domestic demand．This paper analyzes the current situation of the development of urbanization andconsumption，and use the time series VAR model conducted a preliminary study on therelationship between the urbanization and consumption．There is a long-term stable equilibriumrelationship between the urbanization and the consumption， and there is a one-way causalrelationship from urbanization to consumption．Then introduces the consumption habit model，and based on the model， consider the impact of the consumer’s income，the “income effect”of urbanization process，and the income gap in China，constructing a theoretical model of theinfluence from urbanization to the consumption. And analyze the mechanism from theurbanization to residents’ consumption．Then，based on the theory，use GMM dynamic panelto analysis the relationship，not only from the national level，but also areas of the three regionswere studied．The conclusions are as follows：the urbanization will cause positive effectson consumer spending．Urbanization there is a positive development for the consumer “incomeeffect”，while urban residents to rural residents“demonstration effect” is not obvious．Throughempirical research on the three regions，found that the urbanization of the eastern region hasnegative effect to consumer，while the central and western regions had a positive impact．The“income effect” of urbanization of the western region is not significant， and the “incomeeffect” of the central region is the most significant．Finally，according to the empirical results and mechanism of action，put forward the relevantpolicy recommendations．...