Why does increasing consumption stimulate economic growth?

Category: Business/Financial Management

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Analysis:

Since the end of last century, the pulling effect of China's net exports on economic growth has weakened or even been negative, and consumption has once again become the most critical driving force. Economists believe that China has entered a new round of independent economic growth cycle, which is driven by the further upgrading of residents' consumption structure, and the further upgrading of residents' consumption structure depends on the emergence and rise of the middle-income class in China.

From the establishment of 1949 New China to the initial establishment of a well-off society, China's economic development can be roughly divided into three stages, and consumption upgrading also presents different characteristics of the three stages.

The first stage:1949 ——1978.

At this stage, China has changed from a big agricultural country to a preliminary industrialized country. 1978 China's total industrial and agricultural output value is 586.9 billion yuan. Relying on the 156 project aided by the former Soviet Union, China established the basic framework of the industrial system and laid the foundation for the development of automobiles, shipbuilding, airplanes, aerospace and nuclear industry. From 1953 to 1978, China's total social output value and national income increased by 6.26 times and 3.53 times respectively, and the proportion of total industrial output value to total social output value rose from 34% to 62%.

If analyzed by international common indicators, although China's per capita GDP is only $205 at 1978, the proportion of manufacturing industry is as high as 3 1%, which is 13 percentage points higher than that of low-income countries with per capita GDP of $300, and even nearly 9 percentage points higher than that of moderately developed countries with per capita GDP of1200. This shows that the people of China have reached a higher level of industrialization at a very low income level and at a very high cost. The price is that the people of the whole country "tighten their belts to live."

This stage is a typical stage of high accumulation and low consumption. The state basically covers all the living expenses of urban residents, and all China people live a unified "ticket" life (or quasi-ration life). At that time, people scrimped and saved, and pursued family fortune's dream: bicycles, watches and sewing machines, also known as the "third item". The consumption level of "old three pieces" is basically around "100 yuan". This stage is "supply-determined", that is, people's consumption demand is rigidly constrained by the types and quantities of products that the whole society can supply, and consumption is completely in a weak position in the game between consumption and supply.

Phase II: 1979-2000

With the convening of the Third Plenary Session of the 11th CPC Central Committee in 1978, China began the historical process of reform and opening up. In the past 20 years, China has changed from a primary industrialized country to a new industrialized country, and its GDP has risen from 6 175 billion yuan to 8,940.4 billion yuan. The rapid expansion of consumer demand is an important feature of this period. Economists generally believe that the change in this period is the first consumption revolution in the history of China residents' consumption. From the content and nature of consumption, especially the change of residents' choice preference, 1984 is an important historical turning point: before that, it can be called the expansion stage of consumption quantity; Then there is the stage of improving the quality of consumption.

In the stage of quantitative expansion, the basic feature of residents' consumption is to solve the problem of food and clothing and compensate the long-term unsatisfied consumption demand before the reform. Therefore, people have a strong demand for almost all kinds of necessities, mainly manifested in the expansion of plane quantity under the original consumption structure.

The expansion of residents' consumption has effectively promoted the transformation and structural adjustment of the national economy from 1979 to 1984. Among them, the outstanding facts are as follows: First, Engel's coefficient rose from 0.56 to 0.59; Second, the proportion of household consumption in national income rose from 65% to 70%; Thirdly, under the strong influence of demand, the output share of agriculture and light industry rose from 22% and 26% to 25% and 27% respectively. In addition, the household savings rate rose from 3% to 12%, and the share of household savings, that is, the proportion of household savings in total social savings rose from 9.6% to 2 1.4%. This shows that:

First, the long-term savings potential of the whole national economy, especially in the production of daily necessities, has also been released unprecedentedly, bringing about an all-round change in the development model; Second, China began to shift from attaching importance to national accumulation to "storing wealth for the people", and the consumer demand of residents was treated fairly, and the pulling effect of consumption on the economy began to appear.

It can be said that this period is the most suitable period for residents' consumption demand and national economic growth, and it is a golden age that China can be proud of in the history of economic development.

After 1984, China residents began to enter the stage of quality affluence with the pursuit of consumption quality and grade as the central content. This stage is characterized by the continuous decline of Engel coefficient, which fell to 39.2% in 2000. It is at this stage that residents' consumption choices really have independent significance: they get rid of the administrative constraints imposed by the traditional system and the physiological constraints formed by the low income level in the stage of quantitative expansion.

With the rise of income level and the continuous expansion of choice space, consumers put forward new and higher requirements for the development of national economy. Therefore, consumption has become the basic force of industrial structure upgrading and national economic structure transformation, and plays a decisive role in China's economic growth. For example, in the 1980s, the average contribution rate of consumption to GDP was as high as 68%. After the 1990s, investment and external demand increased rapidly, and the role of consumer demand declined, but consumer demand still played an important role, reaching an average of 55%.

This stage is an important step for China residents to live a well-off life. Television, refrigerator and washing machine, the "new three big items", have become the wealth darlings of this era, and the consumption level has risen to "1000 yuan", which is 10 times that of the wealth darlings in the first stage, which also means that the pulling effect of consumption on the economy has increased by 10 times.

The third stage: 200 1-2020

Since the end of last century, the pulling effect of China's net exports on economic growth has weakened or even been negative, and consumption has once again become the most critical driving force. Economists believe that China has entered a new independent economic growth cycle, which is driven by the further upgrading of residents' consumption structure, which depends on the emergence and rise of the middle-income class in China.

According to the data of the National Bureau of Statistics, in 2000, China's GDP exceeded 1 trillion US dollars, and its per capita GDP exceeded 800 US dollars. On the whole, it has jumped from the ranks of low-income countries in the world during the Eighth Five-Year Plan period to the ranks of low-income countries in the world, which is basically at the same level as Italy. The China Academy of Social Sciences and the National Bureau of Statistics have both conducted national social stratum sampling surveys. The survey results basically show that the number of "middle class" in China has greatly increased, accounting for about 15%- 18% of the total population.

With the rise of the middle-income class, China's consumption rate (the ratio of consumption to GDP) will continue to rise, from 58% in 2002 to 65% in 20 10, and reach 7 1% in 2020, which is close to the level of developed countries.

The consumption tendency of the fast-growing middle-income class is to buy high-end and new-type goods, thus promoting the upgrading of consumption structure and industrial structure. Last year, China's per capita GDP exceeded $65,438+0,000, which is the starting line for consumption upgrading. At present, in the coastal developed areas such as Shanghai, Beijing, Guangdong and Zhejiang, where the per capita GDP exceeds 3,000 US dollars and the middle-income class is "clustered", the performance of consumption upgrading is particularly obvious, and these areas have taken the lead in entering a well-off stage.

In 2000, Shanghai attracted attention because its per capita GDP exceeded $4,000. According to internationally accepted standards, Shanghai has become a moderately developed city. In April, 2002, a newspaper in Shanghai published a social survey and analysis on the family income in this city: 1% residents are "very rich" and their annual income exceeds/kloc-0.2 million yuan; 5% residents are relatively rich, with an annual income of 50,000 ~10.2 million yuan; 7 1% residents belong to a "well-off society" with an annual income of nearly 50,000 yuan. Shanghai proposes that the per capita GDP will reach 7,500 US dollars in the next five years, and the consumption power of middle-income families will reach 65,438+10,000 yuan. According to the survey in Beijing in March 2002, the average assets of urban households reached 475,000 yuan (including financial assets of 6,543,800 yuan+0,320 yuan).

In the consumption expenditure of the middle-income class, compared with 1992 in 2002, the propensity to live such as food and clothing decreased by 22 percentage points, while the propensity to enjoy and develop such as medical care, transportation and communication, entertainment, culture and education, and housing increased significantly by 17 percentage points. Investing in real estate, finance and insurance has become fashionable, and urban investors have gradually surfaced. According to Maslow's hierarchy of needs theory, these people have begun to pursue economic security, enjoyment and development, and a perfect investment and financial management plan will be very attractive to them. The savings expenditure of the middle-income class is changing to investment expenditure, and stocks, education and insurance have become their consumption hotspots. Moreover, they are generally loyal to the brand and have a very mature consumption concept. Recently, Zero Survey Company conducted a survey on the financial management of middle-income groups, and the results showed that children's education funds, insurance, national debt and other low-risk security tools increased the most.

Middle-income earners have the highest marginal propensity to consume (the consumption increased by every yuan of income equals to the consumption increment/income increment), which is 1. 1, that is, every yuan of income can drive the consumption of 1.1. Followed by: middle-and high-income people, the highest-income people, the lowest-income people, and the low-and middle-income people. Middle-income earners have become a sustained driving force for economic growth. The National Bureau of Statistics predicts that if the middle-income group increases by 1 percentage point every year, it will reach 38% in 20 years. About 250 million employees in China have reached the middle-income group. After 20 years, the annual income level of middle-income individuals should be roughly 50,000-80,000 yuan, personal financial assets should be more than 300,000 yuan, and the Engel coefficient should be reduced to about 25%.

The growth of middle-income people will inevitably bring about the change of consumption, that is, the quality of life has received more attention, from the pursuit of quantity to the emphasis on quality; In disposable income, the absolute amount of consumption expenditure has increased, and the proportion of investment consumption (insurance, housing savings, bonds, stocks) has increased. These positive changes will in turn promote the adjustment and optimization of urban industrial structure and economic structure, especially the tertiary industry, rapidly increase the demand for the tertiary industry, promote the rapid development of the tertiary industry, and change the unreasonable situation of the low proportion of the tertiary industry in China.