In the past 30 years, the household consumption as percentage of total GDP went downhill quickly. It was more than 50% in the eighties, and then down to approximately 40% in nineties. Unfortunately, it was only 35% in 2007.
Chinese government unveiled several policies to stimulate household consumption. Disappointingly, the total volume of actual retail sales of consumer goods didn’t increase significantly, especially compared with investment in the fixed assets whose growth is over 20%.
Does national income experience a fast growth? The answer is negative , especially compared with the growth of public revenue.
Taxes’ proportion of national income stays high. In 2010, among the GDP accounting for 4 trillion yuan (USD636 billion), total national income is 1.97 trillion yuan (USD313 billion) while taxes accounts for 0.49 trillion yuan (USD78 billion). Taxes’ share in total income was only 10% in 1998.
In addition, heavy burden of purchasing household properties put more pressure to the residents. According to a research by China Household Finance Survey, until the mid 2011, 13.94% non-agricultural families applied for bank loan for the purpose of purchasing houses.
Source: 21st Century Economic Report, China Household Finance Investigation Report