Household Consumption In China Research Articles

Beyond the scenery: Understanding the impact of rural tourism development on household consumption in China

AbstractThe positive effects of rural tourism are widely recognized, yet its influence on local household consumption has been insufficiently explored. Our study fills this gap by investigating the relationship between rural tourism development and household consumption, using the Leisure Agriculture and Rural Tourism Demonstration County (LARTDC) policy as a quasi‐natural experiment framework. Employing a staggered difference‐in‐differences (DID) method, we found that rural tourism development contributes to a 4.91% increase in per capita household consumption. The robustness of our main results is confirmed using advanced techniques such as Bacon decomposition and DIDM estimations. We attributed this positive impact to the rise in nonfarm employment and infrastructure development. Our heterogeneity analysis further reveals the inclusive nature of rural tourism, showing its significant role in improving household consumption patterns, diminishing consumption inequality, and enhancing welfare, especially in disadvantaged rural households. Further analysis confirms that greater LARTDC policy exposure may lead to higher levels of household consumption. Moreover, we revealed that rural tourism increased the freedom of employment, especially for the elderly and women; however, it did not squeeze out leisure time or hurt the quality of life and welfare. Theoretically, this study contributes to the discourse on tourism's role in fostering economic growth and social equity, addressing the patterns of high savings and low consumption in rural China. Practically, our findings suggest that post‐COVID‐19 recovery strategies in developing countries may emphasize rural tourism development, aiming to stimulate household spending and achieve balanced growth.

Effects of the Resident Basic Medical Insurance Reform on Household Consumption in China

Effects of the Resident Basic Medical Insurance Reform on Household Consumption in China

A Study on the Factors Influencing Household Consumption from a Money Demand Perspective: Evidence from Chinese Urban Residents

Based on the classic Keynesian theory of money demand and city panel data, in this study, we investigate the impacts of different money demand motives on urban household consumption in China, and provide ideas for promoting sustainable growth in household consumption in China. The results of this study show the following: First, in general, the theory of money demand motivation can adequately explain household consumption in large and medium-sized cities in China. Second, the CPI time series has a significant adverse effect on the real money demand of most households. Third, residents significantly reduce food consumption to satisfy speculative money demand for financial instruments, and the lower the income level, the keener households are to invest in high-risk stocks. Fourth, even for high-income households, the precautionary money demand generated via the purchase of commercial insurance still has a significant crowding-out effect on their total consumption. Social security spending, which reduces the precautionary money demand of households, has a much more positive impact on high-income households.

Direct and indirect consumption activities drive distinct urban-rural inequalities in air pollution-related mortality in China

Household consumption in China is associated with substantial PM2.5 pollution, through activities directly (i.e., fuel use) and/or indirectly (i.e., consumption of goods and services) causing pollutant emissions. Urban and rural households exhibit different consumption preferences and living areas, thus their contributions to and suffering from air pollution could differ. Assessing this contrast is crucial for comprehending the environmental impacts of the nation’s ongoing urbanization process. Here we quantify Chinese urban and rural households’ contributions to ambient PM2.5 pollution and the health risks they suffer from, by integrating economic, atmospheric, and health models and/or datasets. The national premature deaths related to long-term exposure to PM2.5 pollution contributed by total household consumption are estimated to be 1.1 million cases in 2015, among which 56% are urban households and 44% are rural households. For pollution contributed indirectly, urban households, especially in developed provinces, tend to bear lower mortality risks compared with the portions of deaths or pollution they contribute. The opposite results are true for direct pollution. With China’s rapid urbanization process, without adequate reduction in emission intensity, the increased indirect pollution-associated premature deaths could largely offset that avoided by reduced direct pollution, and the indirect pollution-associated urban–rural inequalities might become severer. Developing pollution mitigation strategies from both production and consumption sides could help with reducing pollution-related mortality and associated urban–rural inequality.

The effect of the digital divide on household consumption in China

The rapid digitization of economy and the widening of digital divide have attracted the attention and interest of many researchers. In such a context, this paper aims to identify the causal effect of the digital divide on household consumption. Using the 2017 and 2019 waves of the China Household Finance Survey (CHFS) data, we find that the digital divide has led to a significant reduction in household consumption. Besides, such a negative correlation results from the combined effects of (i) rising unemployment, (ii) intensified liquidity constraints, and (iii) declining financial literacy. Furthermore, it is discovered that the digital divide has different impacts on households depending on the specific consumption category, thus hindering the diversification of consumption. Our findings are expected to shed some light on the little-documented evidence with profound implications for the socioeconomic policies on the application of technology to enhance the efficiency and inclusiveness of the digital economy.

City Size and Household Consumption in China

Agglomeration and dispersion forces fundamentally determine urban and regional development. While traditional views on agglomeration forces are primarily from a production perspective, the growing literature focuses on the consumption perspective and suggests that larger cities may generate better consumption amenities. This paper joins the discussion by examining whether and to what extent city size increases household expenditure on such non-tradable goods and services, as restaurants, entertainment, health and fitness, housekeeping services and clothes. We hypothesize that city size raises the marginal utility of these consumers by increasing the variety of their products or services, supporting certain sectors that have substantial scale economies, or expanding the number of their specialized retail stores, so that households in larger cities want to spend more on these items. The data we use are from the China Household Finance Survey that documents the income, expenditure and demographic information of more than 8000 households from 85 cities in 2011, 2013 and 2015. Our results indicate that city size significantly raises household expenditure on restaurants, entertainment and health and fitness. These sectors have either quite differentiated products or services, or significant fixed costs, so that they rely heavily on scale economies.

FinTech adoption and financial inclusion: Evidence from household consumption in China

This paper provides micro-level evidence on how FinTech adoption affects household consumption and consumption inequality. Our hypothesis is that through FinTech's payment facilitation and credit constraint alleviation, higher FinTech adoption by households fosters financial inclusion by promoting consumption. Financial inclusion is especially increased for households that traditionally consumed less, which suggests that FinTech could reduce consumption inequality. By combining region-level FinTech adoption measures with household-level representative data of consumption, we find that higher FinTech adoption by a household increases household consumption and reduces consumption inequality across households. Using the distance to Hangzhou from the city in which a household is located as an instrument variable to capture the exogenous variation in FinTech adoption yields results with similar economic and statistical significance. In addition, traditional financial infrastructure is still a prerequisite for the benign distributive impacts provided by FinTech credit, which demonstrates the need for further welfare-improving policies. Our paper adds to the literature by documenting FinTech to be a market force that contributes to financial inclusion.

How do Geohazards Affect Household Consumption: Evidence From China

Geohazards trigger well-documented adverse effects on human health and economic development. However, previous studies mostly focused on the impact of one specific geohazard on consumption and discussed the impact mechanism from a limited perspective. In this paper, we focus on the consequences of generalized geohazards on household consumption in China and investigate the mechanisms of the impact of geohazards on consumption from three perspectives by using the China Household Finance Survey 2017 microdata and National Bureau of Statistics provincial-level data. The study finds that, firstly, household consumption is significantly higher in areas with more geohazards and the effect is found to be long-term. This finding passes a series of robust tests. Secondly, heterogeneity analysis reveals that the consumption structure of families is changed by geohazards. Moreover, the frequency of geohazards affects the consumption of households at different income-level to different degrees. Thirdly, among three possible impact mechanisms, the main mechanism of the impact of geohazards on household consumption is through the increasing of individuals’ impatience.

Materials footprint of household consumption in China

AbstractChina has been witnessing profound changes in the consumption behaviors of its population during the last several decades. To better gauge the current consumption structure of Chinese households and investigate the burden exerted by consumption on resources, we calculated the household material footprint (HMF) in China within the individual consumption classification framework developed by the United Nations. HMF is the only life‐cycle‐based indicator adopted into the 2030 Agenda for Sustainable Development. Four types of raw materials and 15 representative consumption divisions were analyzed in this research. The total HMF in China increased by 103% from 1992 to 2017, although the per capita HMF remains lower than the global average. The per capita HMF growth in rural and urban areas differs, with urban citizens consuming 2.8 more metric tons of resources than rural residents as of 2017. The HMF of all materials studied shows a rising trend, especially for metal ores, which underpins the real estate and auto industries. Food‐related consumption is the main contributor to the HMF in China, while consumption of housing and transportation has less proportion yet more growth potential compared with developed countries. This study adds to the literature of studies on the consumption behaviors and domestic demands of China and has further methodologically significant meaning for similar studies in other countries and practical value for policymakers. Overall, this study demonstrates that despite an upsurge in consumption behaviors and gratifying economic records, the incurred resource and environmental burden may fuel risks for sustainable development.

The effects of residential energy price distortions on household consumption in China

The effects of residential energy price distortions on household consumption in China

Impact of Catastrophic Health Expenditures on Chinese Household Consumption.

China has built a social medical insurance system that covers the entire population so as to reduce the impact of diseases on individuals and families. Although the decline in the incidence of catastrophic health expenditures (CHEs) in China is encouraging, this issue remains important. On the basis of considering selectivity bias and heterogeneity, we applied propensity score matching (PSM) to analyze the 2018 data from the China Family Panel Studies. We assigned CHE households and non-CHE households to the treatment group and the control group, respectively, and used non-random data to simulate a randomized trial to investigate the impact of CHE on household consumption in China. The results of this study indicate that, when the threshold is set at 40%, the consumption of households experiencing CHEs (CHE household) is significantly lower than that of households not experiencing CHEs (non-CHE households) and that CHEs have a significant negative impact on other household consumption and a significant impact on the household property and debt. This effect still exists when the threshold is set lower, with household essential consumption most affected. The occurrence of CHEs leads to a reduction in household consumption and a significantly worsening financial situation for the CHE households, impacting the basic quality of life of the families. Therefore, it is necessary to further reform the medical and health system to reduce the high medical expenses.

Mobile payment and rural household consumption: Evidence from China

Exploring effective measures to promote rural household consumption is a challenge for developing countries, where rural areas often face severe financial exclusion and undeveloped commercial services. In this research, the influence of mobile payment, a popular payment method emerging in recent years, on rural household consumption is assessed by adopting China Household Finance Survey of 2017. Estimation results under the instrumental variable method suggest that mobile payment has a statistically significant and facilitating effect on rural household consumption in China. This positive effect is attributed to the benefits of mobile payment in improving financial inclusion and the convenience of consumption activities for rural areas, which is verified by performing several disaggregated analyses in our study. This work provides new evidence for the increasing literature on the economic impact of financial technology and several enlightenments for developing countries to improve the quality of public life through information intervention policies.

Social networks, shocks, and household consumption in China

This paper provides new evidence on the effect of social networks on consumption using China Household Finance Survey panel data. Further, we examine the role social networks play in consumption when households face exogenous shocks. Heterogeneity analysis indicates that the positive impact of social networks on household consumption is greater in rural areas and for low-income groups. We also identify the mechanism of reducing precautionary savings as a channel. Moreover, social networks can alleviate the negative impact of exogenous shocks on consumption and play an informal insurance role. These findings provide a wealth of insights relevant to policymaking.

An empirical analysis of the household consumption-induced carbon emissions in China

As China is becoming a domestic demand oriented economy, it is pertinent to address its household consumption-induced carbon emissions for ensuring environmental sustainability. Besides, managing the household consumption-induced carbon emissions is vital to the attainment of the nation's carbon neutrality agenda of 2060. Hence, this study examines the effects of household consumption on carbon emissions using the Chinese provincial data from 1995 to 2017. The third-generation unit root and cointegration tests are employed to account for structural breaks. Moreover, simultaneously accounting for cross-sectional dependency and slope heterogeneity concerns, the short- and long-run elasticities of carbon emissions are predicted using the pooled mean group, the common correlated effects mean group and the recently developed cross-sectional augmented autoregressive distributed lag estimators. The results, in a nutshell, reveal that household consumption attributes to greater carbon emissions. Apart from household consumption, similar adverse environmental impacts of financial development are ascertained. In contrast, technological innovation and renewable energy consumption are found to curb the carbon emissions. In line with the findings, it is recommended that household consumption of direct and indirect energy should ideally be sourced from renewable resources whereby the adverse environmental impacts of household consumption in China can be reduced. Thus, investment in renewable energy production could be a key energy policy for China. Besides, levying a carbon tax on energy-intensive commodities can also be a means to further reduce the household-consumption induced carbon emissions.

Evolving household consumption-driven industrial energy consumption under urbanization: A dynamic input-output analysis

Household consumption as one of the final demands is indirectly stimulating industrial production and industrial energy consumption (IEC). How household consumption drives IEC and how will household consumption-driven IEC evolve in the future especially under accelerating urbanization remains to be explored in depth. In this study, through identifying changes in the quantity and structure of household consumption in the input-output (I–O) framework, we examine the indirect IEC driven by urban and rural household consumption in China’s 8 groups of industries (27 sectors) in 2005, 2010, 2015 and 2017. Then integrating energy balance, material balance and value balance within the socioeconomic activities, we develop a dynamic simulation model to forecast household consumption-driven IEC from 2018 to 2030. It is found that total urban consumption-driven IEC increased substantially during 2005–2017 (599.8–1028.2 Mtce), also with an increasing proportion in total household consumption-driven IEC (74.5%–80.4%). Along with increasing residential disposal income, urban consumption-driven IEC is estimated to double in 2030. Heavy industry (Manufacture of Chemicals, Smelting and Pressing of Metals are prominent) maintains the leading contributor, followed by Services industry (Transport, Storage and Post is prominent). The gap between urban and rural consumption-driven IEC will continue widening accompanying urbanization. This study links urbanization with IEC via household consumption and introduces I–O simulation modeling into the prediction of consumption-based IEC. The findings of this study can provide insights into sounder management of IEC that combines household and industrial development in the context of urbanization.

Urban household consumption in China: Price, income, and demographic effects

AbstractGiven the government’s goals to restructure the economy away from investment and exports to consumption and to reduce inequality, it is important to have a good understanding of China’s household consumption behavior and to obtain a good measure of consumption adjusted for price differences across regions. We estimate a consumption function that is flexible and distinguishes between different household types such as size and age of head. We develop detailed price data by region, including rental equivalents for owner‐occupied housing. This provides us the estimates of income and price elasticities of different consumption bundles that should be useful for analyzing public policies. We find distinct elasticities for residents of large and small cities. For all urban households the income elasticity for food is about 0.7–0.8, housing is 0.8–0.9, and services is 1.4–1.5. The price elasticity for food and services is about 0.5 and 0.8, respectively.

Income impacts on household consumption's grey water footprint in China

Urbanization is accompanied by growing household consumption and changing consumption patterns, with both having impacts on the life-cycle water pollution generated. This study uses the indicator of grey water footprint (GWF) within an Input-Output framework to examine the decadal change from 2002 to 2017 of the life-cycle water pollution change for household consumption in China, where rapid urbanization has particularly posed looming environmental challenges. Against the background of enlarging inequality, the results also shed light on the impacts of households within different income groups. From 2002 to 2017, GWF required by urban household consumption has increased significantly from 1586 to 2195 km3 while that for rural households have decreased slightly from 1139 to 964 km3 during the same period. Total Nitrogen required the largest GWF throughout the whole period and throughout all different income groups. Food consumption dominated the GWF for household consumption. However, the share of GWF for food consumption decreases with income increases, from 83% for extremely poor rural households to 71% for very rich urban households in 2012. Urbanites on average require higher GWF for their consumption than their rural counterparts. An average person from the highest income rural households required 2033 m3 GWF for household consumption, which is higher than a person from a very poor urban household (1685 m3) but lower than that of a person from poor urban household (2149 m3). While household consumption volume increase has been the primary driver for GWF increase, pollution intensity reduction has offset such impacts. Household consumption pattern change's impacts differ by household income and by pollutant considered.

House price and household consumption in China: evidence from micro-level data

Purpose This paper aims to identify how house price affects household consumption. Design/methodology/approach The authors use a micro-level data set that tracks the house price and consumption of a vast number of households over a period of four years. OLS regression is the main econometric method. Findings The authors document robust evidence that an increase in house prices stimulates household consumption, regardless of whether a household owns or rents. Moreover, the authors find that both acquiring and losing homeownership negatively affects household consumption. Further investigation suggests significant regional heterogeneity in the relationship between house prices and household consumption. Originality/value This is one of the first studies examining the relationship between house price and household consumption in China using micro-level data. Given the uniqueness of the Chinese housing market and China’s fast-growing consumption rate, the study contributes new evidence to the long-lasting debate.

Accessibility of financial services and household consumption in China: Evidence from micro data

Access to finance has embraced by policymakers as an important tool for promoting inclusive development and achieving long-run financial security, while most studies provide macro-perspective evidence. Fewer yet, have taken into the additional role that digital finance may be playing. In this paper, we combine access to formal finance and digital finance into one framework. Based on the 2015 China Household Finance Survey data, we measure access to financial services from a microscopic perspective and construct a digital finance indicator. We then present evidence that both access to formal finance and digital finance significantly promote households’ consumption, and these effects are much larger for rural households and poorer households in China. Our finding also lend support to the conjecture that digital finance is more beneficial for inclusive development.

Estimating flexible consumption functions for urban and rural households in China

There are few comprehensive studies of household consumption in China that covers all commodities due to data restrictions. This prevents the calculation of inequality indices based on consumption. This lack of coverage also makes analysis of policies that affect consumption difficult; economy-wide models used for analysis often have to employ simple consumption forms with unit income elasticities. We estimate a translog demand system distinguished by demographic characteristics, giving price and income elasticities that should be useful for policy analysis. We estimate separate functions for urban and rural households using household expenditure data and detailed commodity prices (1995–2006). This allows future analysis of social welfare and inequality based on consumption to supplement existing studies based on income. To illustrate an application of the model, we project consumption composition based on projected prices, incomes and demographic changes – aging, education improvement and urbanization.