Research On Change Of Chinese Resident's Propensity To Consume And Its Reasons

In transition period, the steady and sustainable development of China economy has become a consensus. Consumption, directly relating to China macroeconomic situation, has an important position in economic development. At the same time, the first performance of economic development is to raise consumption level and speed up consumption structure upgrading. In transition period, upgrading features of consumption is clear, and consumption structure is fast-changing. But one major concern is, with economic and income growth, that China's consumption rate has been falling, and the issues of low propensity to Consume or consumption sluggish has been increasingly prominent. How to expand consumption demand and stimulate economic growth is currently a major problem. Deep survey of consumer behavior of Chinese residents and adopting effective policies to revitalize consumption become the subject of our study.Classical consumption theories present a general exposition of influencing factors for propensity to consume, expanding and deepening from both income and demand factors. The existing literatures study Chinese resident's propensity to consume from different perspectives and angles, and there are big differences among their research methodology and conclusions. Based on existing theory and research, this paper studies Chinese resident's propensity to consume, fully taking into account institutional factors, income factors and demand factors, and focusing on the role of consumer demand upgrading of Chinese resident in propensity to consume. Following the economic and income growth, people's consumption field gets ever-expanding, and consumption structure has a move toward diversification, and there are the quantity and nature differences among various consumption items. Emerging consumer items, such as transportation and communication, education, health care and housing, gradually constitute the main aspects of consumer behavior. Total consumption expenditure is the result of al! items expenditure and the level of consumption structure upgrading determines the size of consumption. So it is necessary to open the "black box" of consumption, study consumer behavior based on the decomposition of consumer content and examine behavior change from internal development of consumption structure changing. Although the literatures on consumer behavior have been more, it is rare to study current issue of Chinese resident consumption from the point of consumption upgrading. It is not only the demands of reality in consumer demand changing, but also the nature return of research on consumption issues to study consumer behavior and propensity to consume from the pointcut of internal development of consumption structure changing. Therefore, based on advance and evolution of consumer theory and combined with the reality of China economic transition, from the perspective of consumption upgrading, this paper infiltrates institution, income and other factors into consumer demand changing, relates propensity to consume to consumption upgrading, investigate their intrinsic relationship and then return to institution and policy to provide specific and targeted recommendations for the growth of propensity to consume.Based on the perspective of consumption structure upgrading in the transition period, this paper establishes dynamic relationship of income, consumption upgrading and propensity to consume. During the Economic growth and transition, consumer choice mechanism is the interaction of consumption structure upgrading, propensity to consume and income. There is dynamic effect between consumption upgrading and propensity to consume. In particular, the growth in income level is the basic support, the choice and achievement of resident consumption upgrading forms a dynamic relationship with the decision from income to propensity to consume, while the level of propensity to consume determines the space and extent of consumption upgrading, and in the end dynamic equilibrium between propensity to consume and consumption upgrading is obtained. Institutional factors in the economic transition period and income factors in economic growth constitute the basic constraints of resident consumption, and penetrate to the consumer decision-making for specific consumer items, which jointly determine the level of propensity to consume. There are both alternative relationship and complementary relationship among various consumer items. When the consumption structure upgrading is more important, if consumption growth in emerging consumer items can not immediately be transferred to actual demand, this potential spending is not easily transferred to other consumer items. Health care reform, education reform and housing reform directly affect the corresponding consumer items; Income growth makes house and car become the main consumer items. As consumer demand of emerging consumer items can not be quickly realized, the decline of alternative relationship among various consumer items inhibits total consumption expenditure, allowing savings increase and expenditure decline. China's market-oriented forward, the imperfect of policies and systems, and the mismatch between them lead to the difficult of consumption upgrading, and inadequate of consumption upgrading is reflected in the decline of propensity to consume, and then harms the interaction between consumption upgrading and propensity to consume. In addition, the uncertainty of institution, income and expenditure of emerging consumer items are also important factors affecting propensity to consume.In the quantitative analysis, with regard to the effect from consumption upgrading on propensity to consume, time series analysis shows that the degree of change in consumption structure and propensity to consume have cointegration relationship of long-term equilibrium; ELES model theoretically describes the effect of consumption structure changing on propensity to consume, and empirical analysis shows that consumption structure factor plays more and more important role in propensity to consume changing. Quantitative analysis shows that there is close link between consumption structure upgrading and propensity to consume, and the different impact from different consumption item. Furthermore, based the complex relationship among consumption upgrading, propensity to consume and income, and the uncertainty of their relationship, this paper uses vector autoregression (VAR) and panel data model to carry out empirical research. Much relevant research has been the lack of the dynamic system relation among consumption upgrading, propensity to consume and income, so has not do the research of consumer behavior from the perspective of consumption upgrading. Vector autoregression (VAR) empirically studies the dynamic effects of consumption structure changing on propensity to consume. Empirical analysis shows the difference of directions and degrees of various major consumption items'effect on propensity to consume. Specifically, for urban residents, changes in the proportion of three traditional consumption items, food, clothing and household appliances and services, have reverse effect on propensity to consume. Four hot consumption items, medical care and personal products, transportation and telecommunications, entertainment and education and housing produce different impact on average propensity to consume. The proportion change of education, transportation and communication and housing produce significant positive influence on propensity to consume; while the proportion change in health care spending tends to have very prominent and sustained negative effect, and is an important reason for consumption sluggish, reflecting burden caused by the health care reform. As for the impact degree, emerging consumption items have greater impact than the traditional consumption items on propensity to consume, which also reflects consumption upgrading influence on consumer behavior. Empirical analysis of rural residents reflects the differences from urban residents:compared with urban residents, the proportion of consumption of household appliances and services in rural residents has a greater positive impact on propensity to consume, indicating that consumption of household appliances and services is still a key project for consumption upgrading in rural areas, and it should be the focus of rural consumption policy; Proportion change of rural residents'health care spending tends to constitute the positive impact on propensity to consume, indicating the practical burden from health care spending. In comparison, the relation between consumption upgrading and propensity to consume in urban residents is influenced more by the policy and institutional changes (such as health, education and other consumption); Based on the lower level of income, the relation between consumption upgrading and propensity to consume in rural residents is subject to physical consumption(such as household appliances, housing, etc.) more, and lower income level makes the consumption upgrading of rural residents at a lower stage. Further, panel data analysis examines long-term relationship between various factors and propensity to consume. Conclusions contribute to the establishment of relation between consumption promoting policy and consumption structure upgrading to achieve their consistency. Conclusions on the effect from the proportion change of various consumption items on propensity to consume provide important inspiration as fallowing aspects:to promote emerging consumption items, attaching great importance to the reform and development of medical industry, to reduce residents pressures and uncertainty from health care spending, as soon as possible to establish positive and effective social protection system and to promote rural consumption for the revitalization of consumption and so on.