Causes of China's Low Consumption from the Perspective of Local Governmental Competition

Literature Review

As for the reason why the consumption rate in China is so low, scholars have conducted various research studies and have obtained valuable findings.

Summarizing the existing literature, the authors find that scholars have mostly studied the causes of low consumption from the following three aspects of the issue: Firstly, the macroeconomic variables that affect consumption – variables including the price index (Chen, 2009; Zhang, 2009; Liu, 2014; Liao, 2014, etc.), income disparity (Meyer & Sullivan, 2013; Lise, 2014; Zhang, 2016), interest rate, and financial development (Wang & Jiang, 2006; Wu, 2015; etc.); Secondly, the micro-economic variables related to income (Chakrabarty et al., 2006; Zhu, 2012; Chen, 2012; Zheng et al., 2015; Mao et al., 2016) and family situation (Tan et al., 2014; Li & Chen, 2014; Song, 2016); Thirdly, various consumer-related policies, mainly social security policies, fiscal and taxation policies, credit policy, and so on (Jia, 2012; Guo et al., 2013; John, 2014; Long et al., 2016).