Relationship between per capita consumption and disposable income in regions of the P. R. C.

Li, Ran

This thesis provides a quantitative analysis of the relationship between per capita consumption and per capita disposable income for 31 regions and the whole coun- try of China from 2013 to 2021. Panel data analysis based on the LSDV model and time series data analysis based on the dynamic model were conducted. The results show that Chinese residents' income and consumption levels are generally low, with a decreasing trend from the Eastern to the Central and Western Economic Belts, and significant variations within each Economic Belt. Moreover, Chinese consumers exhibit a low willingness to consume, and the principle of diminishing propensity to consume does not fully apply to them during this period. Chinese citizens' consump- tion has a ratchet effect, where previous period consumption significantly affects current period consumption. Finally, suggestions are provided to the government to promote consumption and reduce the regional consumption gap.

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