Households’ Fixed Assets Choice And Its Effect On Consumption In China

In the past30years, the very important achievement of reform and opening in China is that households’assets continued to mount up. On the one hand, there is a steady increase residents’savings deposit, as well the kinds of financial assets become increasingly abundant. On the other, since the housing commercialization policy was implemented wholly in1998, housing assets has been important part of households’assets. Meanwhile, with more and more urban and rural residents engaging in individual businesses or starting private enterprise, there has been a gradual increase in the proportion of rural family owning agricultural machinery, and productive fixed assets plays an important role in households’assets for urban and rural residents which shouldn’t be ignored. Not only made those changes above the household financial research with the assets choice as the core to be given more and more attention, but also made that the assets became one of main variable for the analysis of household consumption of urban residents.The17th National Congress of CPC brought out creating conditions let more populace take possession of. While the17th National Congress of CPC pointed up increasing populace property income through multi-channel. Therefore, there will be no limitation to financial assets for the research about households’assets choice in China but fixed assets should be considered more. Besides, China is developing country with various characteristics of the Dualist Economical Structure in rural and urban areas, and existing research about households’financial assets chose the urban residents as their study objects, which showed certain rationality. But when studying it, especially the relationship between households’fixed assets and consumption, the rural households should be given consideration. Hereby, on the basis of existing research, the article constructed the theoretical frame for households’fixed assets choice and its effect on consumption. Then using the household micro-data of CFPS from2010to2012, we make the empirical test on influencing factors of households’ fixed assets for urban and rural residents, as well as the assets and wealth effect of housing fixed assets.Our article is structured to seven parts. Part I is the introduction, which elaborates the research background, the approach, the data, and the possible creation and shortage. Part2gives the theoretical literature and distinguishes some definition, for example, the rural and urban household fixed asset, household fixed asset and household consumption. Then on the above theory base, in our Part3, we analyze the present characteristic of the household fixed assets and consumption in China. And from the standpoint of assets choice, we make the empirical test referring to different fixed assets in Part4. In particular, Part5and Part6explain how the household fixed housing assets and the productive fixed assets make effect on consumption, including asset effect and wealth effect. Finally, we estimate the result and corresponding suggestion.Hereby, our main conclusions are as follows:Firstly, in the matter of the choice for households’ fixed assets, the difference exists in the effects on investing fixed housing assets, the productive fixed assets for industrialization and commercialization, and the assets for agricultural mechanization. The specific factors consist of the age, sex, education, race, political status, health, employment, marital status, trust, medical insurance, optimistic mood, household income, liquidity constraint, social interaction, whether in-system household or not, household scale, economic growth, etc. On the other side, the level of household wealth has active effect on whether the urban and rural household will own or deploy more fixed asset. Otherwise, some variables’ effect on household fixed asset turns out to be small such as economic acknowledge religion belief and financial development and so on.Secondly, in the matter of the fixed housing assets’ influence on consumption, generally speaking the asset effect exists referring to total housing assets of urban and rural households, self-owned fixed housing assets and investing fixed housing assets; morally the asset effect on fixed housing assets is weaker than financial assets. Next, in our sample of the whole household and the rural household, the asset effect on self-owned fixed housing assets is weaker than investing fixed housing assets, while the urban household is polar opposite. Then as for wealth effect, except that the investing fixed housing assets of urban household have faint wealth effect, the self-owned fixed housing assets’ wealth effect is nonexistent.Thirdly, in the matter of the productive fixed assets’ influence on consumption, the asset and wealth effect of the urban and rural households’ productive fixed asset both exist obviously. On one side, the asset effect the productive fixed assets are stronger than the total housing assets’, but weaker than the financial assets’. On the other side, the productive fixed assets’ wealth effect is also weaker than the financial assets’. Referring to rural household, the asset and wealth effect of the productive fixed assets for industrialization and commercialization is stronger than agricultural mechanization.In this paper, research findings present as the following factors:Firstly, from the research perspective, most of research about household asset choice was based on the financial asset, especially the stock asset, while hereby we select the fixed asset as our object to analyze the influence factor for the investing fixed assets, the productive fixed assets industrialization and commercialization as well as the assets for agricultural mechanization. Evermore, we expand the research sphere. On the other hand, in the matter of the relationship between households’ assets and consumption, previous paper mostly selected the urban household as the object but none of them focused on the rural household. In this paper, we fill the sample with the household, the urban household and rural household and separately study their asset and wealth effect.Secondly, from the research method, based on the panel data of CFPS2010and CFPS2012with the household fixed assets and related variable, when estimating the wealth effect of the household fixed assets in China, we adopt the fixed effects model which turned out to be the same result as the difference model, and only if T=2.