An Analysis Of Expanding China 's Consumption Policy Under The Impact Of Financial Crisis

The whole world takes note of the great economic achievement that China has made since1978reform and open-up. In spite of considerable improvement of GDP and living standard, domestic consumption ratio decreases year by year. Especially, it fell48.6%in2009from a year earlier due to global economic crisis which had huge repercussions in the China’s export-driven economy. Chinese government carries out a series of financial and monetary policies to stimulate domestic consumer demand in order to recover from crisis as quickly as possible, shown to be effective. This paper analyzes the causes that bring about lack of domestic consumer demand and discusses the effects of economic crisis on domestic consumption from horizontal and vertical perspectives. This study also focus on the policies Chinese government takes to stimulate domestic consumption. At last this paper derives recommendation concerning Chinese consumption policies (or suggestion) in the post-crisis era, analyzing the differences of spending patterns between USA and Chinese people from the view of devising ways to restrain crisis expansion and to strengthen risk management ability.This paper is divided into following four sections:First, the first part of analysis introduces background of study, reviews changes of Chinese consumption policies in sequence, especially focused on differences between before and after the1978Chinese reform and open-up. Then this paper handles problems stemming from the process of consumption policy development, classifies effects of economic crisis to domestic consumption and related policy decisions, and at last summarizes the viewpoint of Chinese domestic academia to the consumption policy and financial crisis; Second, we discusses the causes of insufficient consumer demand by researching the present Chinese consumption status from both vertical and horizontal point of view. This study takes Keynes Theory in order to analyzing effect of economic crisis to personal income, consumer expectation, and consumption; in third part, this paper applies Keynesian national income equation to analyze how government spending and investment policy stimulate domestic consumption. This paper analyzes the effect of macro-economic control policy through derivation of multiplier theory, and also discusses the intention and efficiency of expanding domestic consumption policy which Chinese government led. And then, we focus on the effect of "Chinese Government’s Consumer Electronics Subsidy Policy" and real estate policy; Forth, this paper handles the consumption policy in the post-economic crisis era. This paper brings up recommendations to national consumption policy from the post-crisis perspective, based on the result of comparing consumption pattern between Chinese and USA consumers.