An Empirical Study On China's Household Consumption

Since China's reform and opening-up,China's household consumption ratio is well below the International average level for quite a long time.Moreover,the ratio keeps going downward since the 21 st Century.The view that China's household consumption ratio is low was widely accepted.A lot of literature try to explain this phenomenon by analyzing the household consumption pattern of China.But the conclusion is inconsistent.Some scholars turn to suspecting the reliability of the official consumption ratio data.They consider that,China's household consumption ratio is different to other countries' in statistical caliber and calculation method.Furthermore,China's non-observed economy makes a big difference into the in-comparability of the data.They believe that the household consumption ratio is not low but underestimated(Zhu 2013;Wang 2014).On the basis of an international standard,this essay tries to empirically study whether China's household consumption ratio is really low or statistically biased.The subject of this essay consists of three parts.The first part is the comparison between the China's GDP accounting method of expenditure approach and the international standard.By the comparison,this essay finds out the different statistical items and non-observed expenditure which affect the comparability of consumption ratio data.The second part,by estimating the owner-occupied housing rentals,non-observed consumption in fixed asset investment,extravagant position-related consumption of government sector,this essay empirically analyze this statistical item or non-observed expenditure's influence on household consumption ratio.The third part,this essay adjusted the China's official household consumption ratio based on the empirical study result.And then compare to the similar studies and the international data,in order to make a judgment whether China's household consumption ratio is really low.The main conclusion of this essay is as below:Firstly,the China's GDP accounting method of expenditure approach is somewhat different to the international standard.There are three main differences.The first difference is in the accounting calibers,and it is mainly in the accounting caliber of household housing consumption item.The second one is some part of investment fund been used as personal consumption but which is not correctly calculate.The third one is the Under the China's economy feature,the extravagant position-related consumption is not correctly calculate.By comparison and analysis,the owner-occupied housing rentals,the overestimated part of fixed asset investment,the extravagant position-related consumption are the main factors that affect the reliability of consumption ratio.Secondly,China's household consumption ratio was underestimated.In first,by recalculating the owner-occupied housing rentals by user-cost approach,this essay finds that the official household consumption ratio was underestimated to the extent between 5.74% and11.97% during 2006 to 2012.In second,by estimating the overestimated fixed asset investment using the non-observed economy measure method,this essay finds that the official household consumption ratio was underestimated to the extent between 3.97% to 9.74%during 2005 to 2012.In third,by using the impact from sudden event of Central Eight Rules to the extravagant position-related consumption,this essay finds that the extravagant position-related consumption of government sector is about 6% the fiscal expenditure and the household consumption ratio was underestimated about 1.42% in year 2011 and 2012.Overall,during 2006 to 2012,the average adjusted household consumption ratio is 49.25% which is higher than the official average 35.81% and the average adjusted final consumption ratio is59.82% which is also higher than the official average 49.18%.Thirdly,by comparing the household consumption ration among countries,the adjusted China's household consumption ratio is rational,which is not obviously lower.Though the adjusted China's household consumption ratio is still lower than European countries' and American,it is close to other Asian countries'.