A Study On The Differences Of Rural Household Consumption Among The Eastern, Central And Western Areas During The Period Of Economic Transformation

Consumption, investment and net exports are three carriages that can spur economic growth, and consumption is the most important carriage among these, because domestic consumption shares the greatest part in GDP both in the developed and developing countries. Studies have shown that Chinese consumption rates considerably below the international level, mainly because of weakness in rural consumption market. So, to expand domestic demand is to focus on expanding the rural consumption in fact. Increasing consumption demand of rural residents is very important, particularly in the global finance crisis is still spreading. When urban and rural development has being planned as a whole, people tend to ignore the differences of resident's consumption among rural areas. In fact, natural, economic, social and cultural differences among rural areas will inevitably lead to differences on consumption of rural residents. So studying the differences on consumption of rural residents is very significant and meaningful. The meanings are:Through the analysis on non-equilibrium, level, structure, the relationship with GDP of dwellers' consumption and the causes of regional differences in rural household consumption, we not only can provide a reference to the policy-making that can expand domestic demand and improve the consumption of rural residents, but also can provide intellectual support for harmonizing the development of the eastern, central and western rural areas and harmonizing the development of urban and rural.The main contents of the dissertation are:(1) A division of consumption stages during the year 1993-2007 for rural household in the east, central and western areas. This division provides a time dimension for the subsequent positive analysis. (2) Measuring and comparing the uneven degree of consumption of rural residents in each area and among the three areas. (3) Positive analysis on the differences of the consumption level and structure among the east, central and western areas. (4) Measuring the contribution of rural household consumption to GDP's promotion in each area. (5) Constructing a slope and trapezia model to explaining the main causes of differences of consumption among different areas.The dissertation contains nine parts. Chapterâ… : Introduction. Chapterâ…¡: Brief review of economic theory of consumption. Chapterâ…¢: Positive analysis on the division of rural household consumption:double perspectives of consumption and income. Chapterâ…£: Decomposition and comparison of regional inequality of rural household consumption using Theil index technique. Chapterâ…¤: Regional differences in consumption level of rural residents. Chapterâ…¥: Regional differences in the consumption structure of rural residents. Chapterâ…¦: Differences on the contribution of the east, central and western rural household consumption to state GDP's Growth. Chapterâ…§: Analysis the causes leading to the Regional differences in rural household consumption. Chapter IX:Main conclusions of the dissertation and corresponding policy suggestions.The main conclusions of the thesis are:(1) Consumption and income of rural residents in each area is existing phase feature during the years from 1993 to 2007 and the inflexions are all in 1999.Consumption (income) growth rate of rural residents decreases first and then increases. But the consumption and income of urban residents in each area is not existing phase feature in the same term. Consumption (income) growth rate of urban residents increases at all times.(2) The gap of rural household consumption among areas is greater than the gap within each area. While the gap of urban consumption within each area (the eastern area is representative) is greater than the gap among three areas. Rural consumption gap among areas is significantly larger than urban gap among areas. The descending order of the gap between rural and urban either before 1999 or after 1999 is:the west> the central> the east, that is, the more economically backward of the area is, the more of the gap between urban and rural residents'consumption in the same area is large.(3) The per capita consumption expenditure, the growing amount of expenditure, the growth rate of expenditure of rural residents, ranked by descending order is:the eastern >the central>the western. The relative gaps on the amount of consumption expenditure and consumption growth are much larger in the more backward area, but the relative gap on the growing rate of rural consumption is just opposite. That is to say, there is a potential strength in backward areas that can shorten the relative gaps between rural and urban residents'consumption, and the potential power is more obvious after 1999.(4) Consumption hotspot is assumed by the rule that if the growing rate of a single consumption is fast (more than 9%) and its MPC is increasing. According to this rule, the hotspots of rural consumption in each area before 1999 are mainly transportation and communication, cultural, educational and recreational articles and services, medicines and medical services, the hotspots after 1999 are mainly transportation and communication, medicines and medical services, residence and clothing. There is a significant change that cultural, educational and recreational articles and services began to cool after 1999, because the growth rate of it is the minimum in seven items, resulting from the free of charge in compulsory education.(5) The trend of total APC of rural residents before 1999 is:the eastern>the western >the central. The trend after 1999 is:the western>the central>the eastern. It obviously shows that rural residents'desire of consumption in backward areas is stronger than that in developed areas. But urban consumption is not the case as rural. The gap of MPC between rural and urban residents in the same area is narrowed after 1999. And what the narrowed range is:the western>the central>the eastern.(6) The whole income elasticity of demand of rural residents(WIED for short) either in the eastern, the central or the western area also shows phase feature during the period of 1993-2007.That is, the income elasticity of demand increases first then decreases later before 1999, the elasticity of demand rises steadily after 1999. And the gap of income elasticity of demand among rural areas shows a narrowed trend. It indicates that farmers consume their increasing income more and more, saves their increasing income less and less during the period of economic transformation. In recent years, the average WIED in each area is close to 1 and there is a small difference among three areas. So we can conclude that farmers consume their increased income more and save increased income less. In addition, income elasticity of demand of food and clothing relates positively with regional economic development, elasticity of residence and transportation and communication relates negatively with regional economic development, elasticity of household facilities, articles and services, medicines and health care, cultural, educational and recreational articles and services relates slightly with regional economic development. The gap of WIED between rural and urban residents in each area is reduced after 1999.(7) The whole trend of price elasticity of these items which contain food, clothing, residence, household facilities, articles and services, medicines and health care, cultural, educational and recreational articles and services, except transportation and communication, is gradually increasing during 1993-2007. It shows that price sensitivity of Chinese farmers turns to more evident. In addition to transportation and communication before 1999, absolute value of price elasticity of each of the other consumption items is always:the eastern>the central>the western, this is consistent to the average value of 15 years. After 1999, only transportation and communication is rich in elasticity, the others are all inelasticity.(8) Consumption, especially consumption of rural residents, possesses a weak driving force to GDP (the force is smaller than consumption of urban residents, even much smaller than the government consumption). Comparing the contribution to GDP, urban resident is greater than rural resident in the same areas before 1999 or after 1999.(9) The thesis analyses the inherent mechanism which leads to the differences among three rural areas from the perspective of both demand and supply by constructing a slope and trapezia model. The main factors which lead to those differences are consumption environment (the stock of public goods), income and the level of urbanization.