Dynamic Optimization Of China’s Investment And Consumption

It is always be concerned that how much the investment and consumption make contribution to the development of economic. Many economists pay much attention on the ratio between investment and consumption. The problem of relationship between investment and consumption have been incorporated into “12th Five Year Plan”. “12th Five Year Plan” proposed that China should establish long-term mechanism to expand consumer demand and promote the positive interaction between investment and consumption from policy angle. The eighteenth report also emphasized the expansion of domestic demand. It advocated that in order to maintain a reasonable growth in investment and expand the domestic market size, China should release the residents consumption potential.The paper is about the dynamic optimization of investment and consumption in our country. What is the "dynamic optimization" ? It means that the paper took all the problems we meet in the period of our economic development into consider to achieve the best rate of investment and consumption in different economic stage. Thus the paper gain the "dynamic optimization".At first the paper described the investment rate and consumption rate of China in the past years and the basic situation about investment and consumption in China,at the same time, it analysed the origin. It explained what caused the high investment rate and the low consumption rate of China recently is the stage of industrialization that China in. Then it compared the rate of investment and consumption in China with that in other developed countries and the developing countries. It concluded that there is the same pattern in economic between China and India, which showed the condition of a country decides the investment rate and consumption rate in the process of economic development. Meanwhile it concluded that the conclusion that the investment and consumption in China is imbalance is not reliable when it just compared with other countries. That is, it must consider the conditions when compare the investment rate and consumption rate among different countries. At last considering the problems China encountered in recent years, such as, the serious environmental pollution, the high inflation rate, the low the low employment rate. This paper combined with the practical problems to explore the optimal proportion between investment and consumption, in order to achieve the "dynamic optimization". Thus based on many literatures, the paper established a multi-objective programming model, that is: the constraint condition is: the short-term inflation rate was controlled at 10%- 15%, the unemployment rate at 3%- 5%;the objective is: the least environmental pollution and the fast economic development. Through it, the paper got the best rate in different period. So, it can be used to evaluate the rate is whether reasonable or not in the past years. Moreover, it can be as a reference to our economic development.