The Impact Of China 's Urban Residents' Health, Education And Housing Expenditure On Consumption

Since1979, China has gained great achievement on economy. However, in recent years, excessive dependence on investment and export brings deep structural contradiction. To stimulate investment and exports, it is necessary to maintain low interest rates and low exchange rates. However low interest rates lead to asset bubbles, and low exchange rate lead to the appreciation of RMB. Macro-control is facing dilemma. To take Chinese economy out of the current predicament is enlarging consumption. However, the consumption rate index of China has experienced a decline since1990s. What restrain household consumption in China? How to enlarge consumption? These issues become a hotspot for research in recent years.Due to the existence of the urban-rural dual social structure, China’s urban residents have huge potential boost consumption. Decline with the rate of consumption of urban residents, the expenditure on medical and education as well as the housing prices continued to rise. Whether the increasing spending on medical education and housing make urban resident unwilling to consume? This article will focus on this theme.In order to make the issue clear, this article firstly reviews modern mainstream consumer theory, and analyses the characteristics of Chinese urban residents’consumption. On these analyses, the article makes a qualitative conclusion that health care, education and house spending may bring pressure on the growth of consumption. By using the Life Cycle Hypothesis model advanced by Franco Modigliani in1950s, and macroeconomic statistics in the past30years, this article makes empirical research on the issue mentioned before.Through qualitative and empirical analysis, this article finally comes to a conclusion that is health care, education and house spending do have negative effect on the consumption of Chinese urban residents. To be specific, the article also observes the effect on different urban residents according to their income. It seems that high income residents bear little pressure from health care and education spending, while their consumption growing driven by the growth of house price. Quite the opposite, low income residents’ consumption is restrained a lot both by health care and education spending growth and house price growth.Finally, this article gives some advices for consumption policy of China, including increasing the residents’income-both real income and relative income, establishing and improving social security system for health care, education and house.