Empirical Analysis Of The Residents’ Consumption Level And Structure In Henan Province

Consumption, exports and investment are known as "Troika" to promote economic growth in a country or a region. Of which the demand of consumption plays an important role in the process that economy develops soundly and rapidly in a country. Therefore, the correct analysis of the level and structure of consumption, to grasp the trends that the people’s consumption situation changes, have great theoretical and practical significance for the consumption policy making and implementation of related policies.In recent years, although China’s economy developed rapidly and has made remarkable achievements, it also accumulated a lot of problems to be solved. One problem is the structural contradictions of consumption, exports and investment are prominent: In addition to the excessive dependence on exports, the domestic demand of our country had excessive demand on the investment in fixed assets; the rate of investment and savings continued to be in a high level, while the demand of consumption continued to be low. The growth rate of consumption continued to lag behind the growth rate of the economy. The contribution of consumption to economic growth has also been reduced from 75% during the Ninth Five-Year Plan to less than50% now, which is significantly less than the average level of 80% in the developed countries. Therefore, the Communist Party of China stated in the report of the General Assembly of the Eighteenth National People’s Congress: We must firmly grasp the strategic basic point of expanding domestic demand; accelerate the construction of long-term mechanism to expand consumer demand, expanding the size of the domestic market.The province of Henan has large size of agriculture and population in the inland of China; it also has a large gap in economic strength compared with the southeast coastal areas. As the rise of Central China’s national strategic layout, Henan Province must seize the opportunity to achieve economic development by leaps and bounds.Therefore, the research and analysis of consumption of residents is very meaningful.By the analysis of residents’ consumption level and structure in Henan province, the residents’ consumption in Henan can be boosted and it also has a very important reference to promote the economy developing continuously and rapidly in Henan.In this paper, the research and analysis of consumption in Henan Province, is mainly from two aspects, one is the empirical analysis on the level of residents’ consumption, and the other aspect is the empirical analysis on the structure of residents’ consumption.Through the analysis of the level of residents’ consumption in Henan, we found:fundamentally, there are two factors that affected the consumption in Henan. One is the proportion of residents’ income, and the other is the propensity of residents’ consumption. The paper used the GMM method to study the factors that affecting the income share and found that L / K(labor capital ratio) had a significant impact on the income share of Henan Province, which was to say: the technical factors were the main reasons that affecting the labor income share in Henan. therefore it can be drawn: it occurred as a result of significant labor-saving technological progress in Henan province, making the labor income share decline; by using the least squares method OLS to study the factors influencing residents’ consumption propensity, we got the significant factors that impact on residents’ consumption propensity in Henan Province: revenue growth, the elderly dependency ratio, pension coverage, the inflation rate.In this paper, we used ELES model to empirical study the consumption structure of residents: the marginal consumption propensity of urban residents was always higher than that of rural residents; the absolute value of the own-price elasticity of the eight kinds of the price Consumer Goods was high, while that of the cross-price elasticity was small. Therefore the prices of commodity itself affected the demand of consumers greater, while the prices of other commodity affected the demand of consumers smaller. Among the eight categories of consumer goods, the cross-price elasticity of food and other seven types of consumer goods was the largest, which can be explained: the changes in food prices have the greatest effect on the other seven categories of consumer goods, so the food prices are stable or not, which has a very important significance to the whole economic situation.