Understanding Chinese Consumption: The Impact of Hukou
The Chinese growth miracle was based on exports and investment in recent years. While strong output growth has been maintained even during the financial crisis, the imbalances within the country increased. To return to a more sustainable path of development, policies are directed to improve the role of private consumption. However, the institutional framework is an impediment to the transformation, as it weakens the incentives of households to consume. Besides a low degree of social security and highly regulated financial markets, we stress the relevance of the hukou system as the main driver for modest consumption, especially in recent years. After controlling for different income levels, the average propensity to consume is significantly lower for migrants, as their access to public services is limited. The downward pressure on consumption will increase in the future. The urbanization strategy of the government will likely raise the number of migrants with limited hukou rights, if it is not accompanied by respective reforms. Therefore, the transformation towards consumption driven growth is endangered without further reforms.
|Date of creation:||Dec 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Feng, Jin & He, Lixin & Sato, Hiroshi, 2009. "Public pension and household saving: Evidence from China," BOFIT Discussion Papers 2/2009, Bank of Finland, Institute for Economies in Transition.
- Franklin Allen & Jun & Chenying Zhang & Mengxin Zhao, 2012.
"China's Financial System: Opportunities and Challenges,"
in: Capitalizing China, pages 63-143
National Bureau of Economic Research, Inc.
- Franklin Allen & Jun "QJ" Qian & Chenying Zhang & Mengxin Zhao, 2012. "China's Financial System: Opportunities and Challenges," NBER Working Papers 17828, National Bureau of Economic Research, Inc.
- Wang, Xin & Wen, Yi, 2012.
"Housing prices and the high Chinese saving rate puzzle,"
China Economic Review,
Elsevier, vol. 23(2), pages 265-283.
- Xin Wang & Yi Wen, 2012. "Housing prices and the high Chinese saving rate puzzle," Working Papers 2012-038, Federal Reserve Bank of St. Louis.
- Shang-Jin Wei & Xiaobo Zhang, 2011.
"The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China,"
Journal of Political Economy,
University of Chicago Press, vol. 119(3), pages 511 - 564.
- Shang-Jin Wei & Xiaobo Zhang, 2009. "The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China," NBER Working Papers 15093, National Bureau of Economic Research, Inc.
- Riccardo Cristadoro & Daniela Marconi, 2012.
"Household savings in China,"
Journal of Chinese Economic and Business Studies,
Taylor & Francis Journals, vol. 10(3), pages 275-299, November.
- Steckel, Richard H., 2009.
"Heights and human welfare: Recent developments and new directions,"
Explorations in Economic History,
Elsevier, vol. 46(1), pages 1-23, January.
- Richard H. Steckel, 2008. "Heights and Human Welfare: Recent Developments and New Directions," NBER Working Papers 14536, National Bureau of Economic Research, Inc.
- Barry Naughton, 2007. "The Chinese Economy: Transitions and Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640643, June.
- Ma, Guonan & Yang, Dennis T., 2013. "China's High Saving Puzzle," IZA Discussion Papers 7223, Institute for the Study of Labor (IZA).
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp7819. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.