Social class differences in consumption propensity in contemporary China – from survival-oriented consumption to development-oriented consumption

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.

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