Analysis On China's Income Distribution And Its Influence On Consumption Demand

Since the reform and opening-up in 1978, China economy has been growing at top speed in more than 30 years. Accompanied by high economy growth, Chinese people's overall income level is also improving and people's lives quality now achieves the well-to-do level. And in the same time, there are marked changes in residents'income distribution and income gap. The resources of income are getting diversified and the income gap becomes larger than before. On the other hand, the increasing degree of consumption expenditure of resident of our country had obviously dropped since 1990s. As for consumer demand, the income distribution is one of the most important factors. Now China has higher investment rate and lower consumption rate than many other countries, which are in the same economy level, lacking domestic demand especially consumer demand. This has led to the economic growth of China's serious structural deflection, hampering China's sustained, rapid and healthy development.Because of worldwide economy crisis at present, China's export which has been the great contribution of China'economic growth has serious problems. This leads to power shortage of economic growth and grim situation of domestic economy. So we should attach high importance to this question to prompt domestic demand. The situation now is that the increase of farmer's income lingers at a low level, and the increasing income gap between urban residents and residents in the rural areas has become one focus of Chinese economy development. Too large income gap will cause long-term downturn domestic consumption demand and impact the economy sustained healthy development. Based on this kind of background, studying about income gap and its impact on consumption demand has important theory meaning and realistic subject of meaning.There is the structure of this article. At first, we review the related theory's development on income distribution and consumption both at home and abroad. After that we analyze the current development trends and status quo of the overall income distribution within three different angles that are rural and urban areas, rural area and urban area. And we also analyze China's consumption demand at the same time. In Chapter Three, we discuss the route how income distribution influences the consumption demand and measure this relationship by statistical test. In Chapter Four we discuss the reasons that cause so large income gap. Considering the analysis results of preceding chapters wo got some conclusions about reasonable regulation of income distribution concrete measures in the last chapter .