Prediction of China's Household Consumption and Its Effects on China’s GDP

Abstract

Based on the change trend and the main impacting factors analysis of China’s urban and rural household consumption, considering not only household disposable income and population age structure, but also housing loans, online payment and other factors, this study applied multiple linear regression model and ARIMA to forecast China’s urban and rural household consumption in 2019-2035. The results are as follows. Household income is the main factor affecting urban and rural household consumption. Aging and the increase of household debt have seriously inhibited urban residents' consumption, e-commerce in village has promoted rural residents' consumption. In the future, China's household consumption will still show an upward trend, but the urban and rural household consumption growth rate will slow down to 4.7% and 5.4% in 2035, respectively. Household consumption will continue leading economic growth. Based on the input-output model, it is estimated that GDP will increase by 3831 billion yuan in 2019 as household consumption rises and the driving effect of household consumption on GDP is 3.6%. Some suggestions are put forward to expand household consumption in China.