Abstract
This article employs data from the 2013 China Social Survey to analyse class differences in propensities to consume in contemporary China. Results suggest that the average propensity to consume (i.e. APC) among peasants, the working class, and the old middle class is relatively high; but owing to their limited income, the marginal propensity to consume (i.e. MPC) among peasants and the working class is relatively low. By further distinguishing survival-oriented consumption from development-oriented consumption, the results indicate that survival-oriented MPC is relatively high among peasants, the working class, and the old middle class, whereas the pattern among the new middle class is the opposite, showing a relatively low survival-oriented MPC but a relatively high development-oriented MPC. Results show that in the top-down design of the supply-side structural reform on residents’ consumption, survival-oriented consumption should target peasants, the working class and the middle class, whereas development-oriented consumption should target the new middle class and business owners.
Highlights
This article employs data from the 2013 China Social Survey to analyse class differences in propensities to consume in contemporary China
Economic growth is more likely to be driven by consumption rather than by investment (The National Bureau of Statistics of the People’s Republic of China 2015)
Since the reform and opening-up, the dramatic change in China’s social structure has to a large extent improved China’s consumption standards, which in turn, changed the internal structure of the demand side and invoked the consumption desire for individuals from all social classes to improve their quality of life
Summary
Because household social class status is indexed by the social class status of the householder, the distribution of social classes is calculated beyond the consideration over size of the household ***p < 0.001. While the upper social class, in contrast to the lower social class, has a larger allowance for household consumption expenditure per capita, they present a relatively small proportion of the population and have a comparatively lower APC Their consumption will stop rising after reaching a certain level and, no longer boost demand so as to effectively stimulate economic growth. This suggests a greater consumption potential among peasants, working class, and old middle classes, who together constitute more than 80% of the entire Chinese labour force (see Table 1) Any increase in their income would stimulate domestic demand, and improve the quality of life in Chinese society. The inverted U shape of the MPC14 proves that an increase in income will not lead to an increase in the proportion of consumer spending on disposable income among business owners, and the expected boosting effect of the income
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