Understanding Chinese consumption: The impact of hukou

Christian Dreger, Tongsan Wang and Yanqun Zhang

No 7/2014, BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (BOFIT)

Abstract: Capital investment and exports have driven China's remarkable economic growth for decades, but recent trends have put pressure on the government to move to a more consumption- driven model of growth. Unfortunately, China's institutional framework does little at the moment to spur household consumption. While the country's weak social security setup and highly regulated financial markets are routinely cited as disincentives to private consumption, the role of the hukou household registration system in depressing consumption gets less attention. Controlling for income levels on datasets from 2002 and 2007, we show the average propensity to consume is significantly lower for internal migrants to cities. Official figures suggest that China in 2013 had about 260 million internal migrants. These individuals are often separated from their families for long periods and denied access to public services in the cities where they work. The government's current urbanization strategy calls for increasing migrant populations in cities, which, in the absence of hukou reform, is likely to further dampen consumption.

Keywords: Chinese private consumption; urbanization strategy; hukou system (search for similar items in EconPapers)
JEL-codes: E21 O15 R23 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/212793/1/bofit-dp2014-007.pdf (application/pdf)

Related works:
Journal Article: Understanding Chinese Consumption: The Impact of Hukou (2015)
Working Paper: Understanding Chinese Consumption: The Impact of Hukou (2013)
Working Paper: Understanding Chinese Consumption: The Impact of Hukou (2013)
Working Paper: Understanding Chinese consumption: The impact of hukou (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofitp:bdp2014_007

Access Statistics for this paper

More papers in BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (BOFIT) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().