Government Spending,Openness And Chinese Residents' Consumption

After several decades of reform and opening up,China has made impressive achievement.The problem is also clear.The insufficient demand and the excessive production capacity that accompanied the achievement are constraining the future of China's economy.Given the situation of declining demographic dividend and insuf-ficient export,expanding consumption has become an inevitable choice for economic development.Government expenditure and opening-up have always been the core features of China's economic development model.Studying how local government expenditure and opening-up affect residents' consumption is meaningful.At present,there are many researches on consumption both at home and abroad.But among these studies,there are little studies that put government spending and opening-up in the same frame.And when it comes to opening-up,most of the studies focus on the empirical part,the discussion on the influencing mechanism is often brief without further discussion.We talk about this topic by literature research method,theoretical analysis,em-pirical analysis and statistical approach.First,by literature research method,theoretical analysis,we figure out that opening-up will not only accelerate the consumption by promoting technical progress which will increase the income of residents but also decrease it by increasing labor demand elasticity which will reduce revenue forecast and widening income differ-ences.On the basis of that,we further discuss the joint effect of government expend-iture and opening up on residents' consumption level.The paper conjectures that:opening to the outside world directly influences income distribution in the initial dis-tribution which cannot be made up completely by fiscal expenditure as a policy tool of income redistribution.Moreover,openness indirectly affects income distribution through influencing the scale of government fiscal expenditure,which in essence distorts the income adjustment capacity of fiscal expenditure.And,the expansion of income gap leads to the reduction of residents' consumption.Therefore,two hypo-theses are proposed.Hypothesis 1:government expenditure plays a positive role in promoting residents' consumption,and the influence direction of opening-up is dif-ferent under different economic conditions in different periods.Hypothesis 2:the joint consequence of opening-up and government expenditure on residents' con-sumption will be negative.We made a line chart of collected national data.it is easy to see that the data performance is consistent with the forecast.The above hypothesis was further tested respectively at country level and region level(eastern middle and western regions)using the panel data of 253 Chinese cities from 2004 to 2016.The empirical results show that the government expenditure has a positive impact on consumption,and the impact of opening-up is negative.The joint influence is negative.Industrial structure tilting toward service industry has a positive effect on consumption.The improve-ment of urbanization level's effect is positive.GDP per capita promotes the increase of consumption.