The Impact Analysis Of Residents' Consumption Level About The China's Fiscal Decentralization

Since the 1994 reform of the tax system, China has adopted a unique system of fiscal decentralization, expanding local government property rights and promoting competition among local governments. But as China's local government total expenditure in the proportion of 45% steadily climbed 80 percent from 1981 to 2012,China's consumption level has shown a downward trend, which means lack of long-term aggregate demand. Consumption on China's economic growth is far below the stimulating effect of investment and exports on the economy. Both theoretical and empirical research methods are adopted in this paper, which focusing on the impact of fiscal decentralization on the level of consumption generated.Firstly, the relevant references were consolidated systemly, summarized and analyzed. On this basis, the path of the transmission mechanism of China's fiscal decentralization affects the level of consumption were specifically addressed separately from household income, the impact on the environment and the consumer attitudes of the residents. Secondly, according to the characteristics of the research object, the paper selects the 1998-2012 panel data to build an empirical model, taking the individual fixed effects model, and the impact of fiscal decentralization on the level of consumption of the empirical analysis. The paper selects three indicators to measure the level of China's fiscal decentralization, and analises from the country, the eastern, central and western parts of four regression analysis. The empirical results show that across the country, regardless of adopting any measure by fiscal decentralization, fiscal decentralization has a significant positive impact on the level of consumption of Chinese residents, indicating that fiscal decentralization promotes the level of consumer. In the sub-regional discussions, as opposed to the western region, improving the degree of fiscal decentralization has a stronger positive impact on the level of consumption in eastern and central regions. Finally, based on the mechanism analysis and empirical studies, several policy recommendations to improve the level of consumption are made from the perspective of fiscal decentralization. China should further improve the system of fiscal decentralization,restructure financial expenditure scientifically. It also establishes a reasonable system of local government performance evaluation and sound financial supervision mechanism, promoting Green GDP, improving the consumption environment,focusing on balanced regional economic development level so as to promote the consumption level of Chinese residents which stimulating economic growth.