The Industrial Structre Effect Of Consumption Upgrading In Transition China

The economy of china has been developing well since 1978. There is Continuous improvement in the everyday consumption of the Chinese, as well as the the change of the industrial structure. The relationship of consumption upgrading and industrial structure adjustment has always been the concern of the economists and the government. Lots of economists have done research on this subject. But the result is not satisfying, for it is partial and not systematic, as well as the depth of the research needs to be deepened. That is why this thesis carries out a systematic theoretic and systematic research on the effect of consumption upgrading on industrial structure.A framework was developed on the basis of the SDA analysis by Chenery(1960) and Syquin(1976). The effect of the change in Final demand is decomposed further, that is the effect of consumption is decomposed into level effect and structural effect. The product demand of industry can be sorted into intermediate and final demand. Intermediate demand is the demand between industries, which reflects the technology. Technology and final demand are both important factors affecting the industrial structure. After analyzing the input and output table(IO) between 1987 and 2005 using the framework develop above, which will be named structural decomposition analysis(SDA), a result was found that intermediate demand and the final demand is the main source of industrial development, and the effect of intermediate is smaller than the final demand.On the basis of SDA a new framework is developed on analyzing the effect of consumption upgrading on industrial development, which is a contribution of this thesis. Consumption upgrading affects the industrial structure in two ways. Firstly, it influences the terminal industry, such as textile, food and catering industry directly, which is named direct effect. The demand elasticity for differenct kinds of products differs greatly. When the revenue of the consumer increases, the proportion of demand increase for diffent product defers greatly. That changes the importance of some industry in the structure. Secondly, consumption upgrading needs investment in some emerging industry, which increases the importance of heavy industry, such as machinery and steel, which is named indirect effect. From the analysis of the fourth chapter, we know investment is the dominant force of the insustrial structural change.The direct effect is analyzed for rural and urban consumers separately. The structural effect of the agricultural consumer's consumption is inverse u shaped from 1987 to 2005, the maximum point of the u is 1995. The consumption accelerates the development of agriculture, food & catering industries first. Then the chemical, electricity, petroleum and machinery industries. The effect of urban consumer's industrial effect is similar to that of the agricultural consumer, though differences is there. The influence of urban consumers is stronger than that of the agricultural consumers. The consumption of rural and urban consumers has different priority in stimulate the development of different industries, which contributes to the different growth rate among industries.The indirect effect of consumption is analyzed using time series analysis and SDA. The stability of the relation between consumption upgrading and investment was identified by method of cointegration analysis. The quantitive relation between the series of consumption and the investment is found using ARMA(1,1). One percent increase in Retail Sales of Consumer Goods leads to 0.073% increase in investment. The coefficient of AR(1) and MA(1) is 1 and 0.53, which indicates the investment in the prior period have strong impact on the investment of the current period. Once the relationship between consumption and investment was established SDA is used to analyze the effect of investment on structural change. The effect of investment on the first industry is small relative to that on second and third industry. But the effect on different industries is almost the same in different period, the strongest effect on the basic industries and resource-oriented industries, weak effect on service and agricultural industry.