A Research On The Relationship Between Insurance Development And Consumption Growth Of China

How to efficiently improve the demand of consumption is a key factor tomaintain sustained, rapid economic growth of China. The current situation is that, thelevel of residents’ deposits of China is extremely high, and it will keep increasing inthe future constantly. The high-saving-rate-problem has become a shared concernamong china and foreign countries. How to stimulate Chinese people’s consumptionmotivation has become an important research program. A generally accepted point ofview based on this complexion says that people save money precautionarily due totheir high evaluation of housing or medical treatment which may fill up theirexpenditure in the future.Except for helping people avoid risk and reduce loss, insurance can also assistpeople in money-planning arrangement. Therefore, insurance has certaincharacteristics similar to savings. Besides, in order to get enough compensation,people only have to spend petty cost of insurance premium. So participating ininsurance is more effective than simply saving money.Because of the high development level of insurance industry and social benefitsystem, people of developed countries prefer insurance more to savings. In general,through developing the insurance industry can help us effectively reduce theprecautionary savings, make better spending plan and impact the consumptiongrowth.First, this paper examined the relationship between the insurance industrydevelopment and the growth of consumption based on the theories of consumptionand insurance. Then, by using quarterly data from2006to2013, and establishment ofVEC model, we’ve come to a conclusion that the insurance industry’s developmentcould impact the consumption growth, expand the domestic demand, and even promote economic growth. In the last part, we have made several suggestions abouthow to accelerate the development of the insurance industry.