Consumption behavior of Chinese urban residents during economic transition : Intermittent and cyclical fluctuations

The paper aims to examine the consumption behavior of Chinese residents during economic transition. It explores whether Western theories of consumption are applicable to the Chinese situation, and then tests the hypothesis based on Chinese traditional culture and dynamic nature of system change.

The paper opted for an empirical‐based approach. A regression model was used to analyze annual consumption data from 1986 to 2008 in China.

The paper provides empirical insights and suggests that under the influence of Chinese traditional culture and dynamic change of the Chinese economic system, Chinese urban residents exhibit a special consumption pattern of an intermittent and cyclical nature.

The paper concludes that in order to make the consumption stimulation policy in China more effective, it is necessary to establish a series of measures such as establishing a sound social welfare system as well as narrowing the gap between the rich and the poor, which will substantially increase the buying power of the less‐privileged groups and thus will increase the overall spending in the society. Although the econometric model used in this paper is adequate, a different approach like time series econometrics may give us additional insights. Researchers are encouraged to test the hypothesis further by employing other methodologies. Second, due to the lack of its own theories in the emerging market, this study remains exploratory.

This paper fulfils an identified need to study the special consumption behavior of Chinese urban residents during the economic transition.