Empirical Study On Consumption Of Chinese Rural Residents And Economic Growth

Consumption is the basis for human survival and development, and consumption needs is the original dynamic for the development of society. With the development of economy, the content, structure, style and factors of consumption have changed significantly; meanwhile, consumption has growing impact on social economy. The experience of internal and external economic development shows that to some extent, the speed of economic development depends on the amount of consumption needs, especially in the time economy comes into intermediate or more advanced periods from initial period.China is a developing agricultural country and in the process of reform and opening-up, its deeply-rooted "Thrifty Concept" has affected our realization about consumption factors called "three-horse-drawn vehicle" boosting economic growth. For decades China has rely more on exports and investment to promote economic growth, ignoring the enormous contribution of consumption factors to economic growth and a huge boost of consumption needs to economic development, resulting in abnormal structure of the Chinese economy and over-dependence of economic development on investment and foreign markets. While Chinese economy has entered a full transitional period, various uncertainties further depressed the national consumption, and the international financial crisis has brought the outbreak of a more serious decline in exports. Thus in reality, investment itself can not maintain economic growth. So how to launch the rural consumption market which takes up a majority of Chinese population is of great significance for the sustained, rapid and stable economic growth of China.Based on the modern consuming behavior theory of the west, combined with the actual situation in China's rural consumption, using modern econometric methods, and beginning with the consumption structure and the consumption function, this study is committed to carrying an empirical research on the law of the changes of consuming behaviors of rural residents, factors affecting the changes and its relationship with economic growth. The study aims to help explain the root causes of insufficient consuming needs of Chinese rural residents in the economic transition and to supply theoretical support and policy basis to launch the rural consuming market and to promote economic growth.This paper first reviews and inspects various hypothesis of consumer behavior theory of neo-classical economic theory. Then taking it as reference, it analyses the consuming behaviors of Chinese rural residents in different periods and summarizes the constraints influencing consuming behaviors of Chinese rural residents at the present stage. Furthermore, with dynamic panel data model, it inspects how the income level, the uncertainty, the level of social security and consumption habits affect the consumption structure of Chinese rural residents and thus reveal the behavioral characteristics of Chinese rural residents'consumption and the law of its changes. It is shown that income is still a major factor in rural residents consuming behavior, but with the rapid economic development, consumption prices and social security level have influenced the consumption structure of rural residents more obviously, and moreover, the effects of the long-established consumption habits on consumption needs can not be ignored.Above these, referring to precautionary saving theory, it derives the mechanism of cautious motives in rural residents'consumption, builds Error-correcting Model of rural residents'consumption and adopts provincial level panel data to verify cautious motives of rural residents'consumption. The result shows that in the transitional period, the institutional changes enhance the risk expectation of the rural residents while credit constraint has not been abated timely and effectively, which arouses stronger cautious motives in rural residents'consumption. Based on the results of empirical analysis, it puts forward some policies recommendations such as strengthening the supply of public goods in rural areas, assuring consumption anticipation of rural residents, etc. In order to deeply explore the relationship between the rural residents'consumption and economic growth, Vector Auto-regression is built to verify the relationship between changes in consumption structure of rural residents and the industrial structure development by using the non-structural approach of econometrics. The results shows that changes in consumption structure of rural residents have induced the industrial structure development, but changes in industrial structure have less obvious effects on the consumption structure of rural residents statistically. With the results of empirical analysis, it recommends corresponding policies about optimization of the consumption structure of rural residents and about a reasonable adjustment of industrial structure.Overall, the paper puts forward a number of new perspectives and approaches concerning the relationship between Chinese rural residents'consumption and economic growth, which provides a reference and guide on how to start the rural consumer market, to achieve effective demand for rural residents and to promote the coordinated development of the national economy.