China Economics: The Consumption Story

We examine the factors that contribute to consumption trend in China. This quantitative study finds that disposable income plays a significant role in consumption growth, and the overall effect from real estate market is insignificant. However, the wealth effects from real estate market play a significantly positive role in promoting auto sales, one important indicator of consumption uptrend. Also, the auto policy plays a significantly positive role. This study also finds that the real estate market, in the form of rising rent, has significantly contributed to the consumption downtrend.

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