Empirical Analysis On Comparation Of Chinese Consumption Structure

With the rapid development of global economy and appreciation of RMB,Chinese consumption level had increased quickly since the21stcentury. China hadbecome one of the world’s largest consumption countries, and also wider consideredas the country with greatest growth potential in the world for the next two decades.With the increasing of consumption, urban residents’ consumption structure hadbecame more and more different among regions because of the differences ofeconomy, population, natural resources, as well as education, and the special regionalcharacteristics formed a new consumption structure, which are not only representedby the differences of consumer spending, but also reflected by the variously needs ofproducts’ quantity and quality. The business community and academia also showedgreat concerns of the differences and reasons. Identifying and understanding thesedifferences are very important for the establishment of consumption-related policy.Empirical analysis on comparation of Chinese consumption structure have twoproblems:(1) There are31provinces and municipalities in China, which makes thehorizontal comparation of them extremely difficult based on cross-sectional data;(2)Comparing to the time clustering analysis of single province on the basis of panel data,comparation among provinces is very difficult, because each province has a differentperiod of consumption structure. Therefore, clustering analysis of provinces andmunicipalities’ economic indicators are needed to divide them into several regions atfirst, based on which we can compare the variances of consumption structure amongregions according to cross-sectional data; Secondly, after selecting critical time for thecomparison, proportion of the consumption structure are included in the research oftime variance in the consumption structure. These are two new perspectives of the consumption structure research.The comparation of Chinese consumption structure’s variance among provinces isthe object of empirical research. First, classifying Chinese urban residents in31provinces according to economic indicators in2007by using clustering analysis, andcompare the charistirics of consumption structure between groups on the basis of theamendment ELES model, which included analysis of the marginal consumptiontendency, basic consumption expenditure and index of income elasticity of demand;Secondly, clustering analysis was used to determine consumption period of targetprovinces and municipalities according to15years per capital consumptionexpenditure data of urban residents, and to investigate the variational trends of them,then selecting a critical time to do the invesitigation of the differences amongprovinces, and the conclusion and recommendations of the research were given.The results showed that:(1) Economy is a major effect of consumption structure,different levels of economy can bring the consumption structure of necessities andnon-essentials significantly different;(2) Difference of marginal consumptiontendency between regions was significant, the concept of household consumption wasstill conservative, increasing savings was the main reason of reducing consumption;(3) Difference of basic consumption was evident between developed regions and theother regions, low-income families’ non-essential consumption is limited;(4) The gapbetween rich and poor hinders the total improved of urban residents’ consumptionexpenditure.This study has three innovations:(1) The consumption structure’s variancesamong different provinces and cities can be found through clustering analysisaccording to economic levels;(2) By adding a weight factor, ELES model can solvethe integration issue of provinces within the region;(3) The time variances ofconsumption structure can be studied by comparing the proportion of consumptionstructure of provinces and cities in the critical time.