Consumption Structure Problems and Optimization Strategies of

Low-income Population in China’s Rural Areas

ShiBin Ye

School of Marxism, Hechi University, Hechi, Guangxi, China

Keywords: Rural Areas, Low Income Population, Consumption Structure, Optimization Strategy.

Abstract: In recent years, the income and consumption expenditure of China’s rural residents have been increasing, with

the growth rate of consumption expenditure higher than that of income. With the declining of the consumption

rate of urban residents year by year, the consumption rate of rural residents is rising. The overall consumption

rate of rural residents in poverty-stricken areas is high, so it is difficult to build a sustainable consumption

model. The consumption capacity of low-income population in rural areas is weak, and the expenditure

pressure on non-necessities is increasing year by year. The residents' consumption structure in rural areas can

be optimized in terms of forging an ecological lifestyle of controlling consumption, increasing the supply of

public goods in rural areas, building an intensive commodity sales network and optimizing individual

expenditure structure.

1 INTRODUCTION

1.1 Higher Consumption Rate of

China’s Rural Residents

In recent years, with the rapid development of China's

economy, the income of urban and rural residents has

increased rapidly, and the income gap between urban

and rural residents has also been narrowing. From

2015 to 2020, the per capita disposable income of

urban residents increased from RMB 31,195 to RMB

43,834, and the per capita consumption expenditure

increased from RMB 21,392 to RMB 27,007. The per

capita disposable income of rural residents increased

from RMB 11,422 to RMB 17,131, and the per capita

consumption expenditure increased from RMB 9,223

to RMB 13,713. The growth rate of consumption

expenditure of rural residents was significantly

higher than that of urban residents in the same period.

The income and expenditure gap between urban and

rural residents has also been narrowing, but the

income gap between urban and rural residents was

still greater than the expenditure gap. In 2015, the per

capita disposable income of rural residents only

accounted for 36.61% of that of urban residents. In

the following years, the income growth rate of rural

residents was higher than that of urban residents, and

the income gap between rural residents and urban

residents narrowed gradually. By 2020, the per capita

disposable income of rural residents was equivalent

to 39.08% of the disposable income of urban

residents. In terms of per capita consumption

expenditure, the per capita consumption expenditure

ratio of rural and urban residents increased from

43.11% in 2015 to 50.78% in 2020. In other words,

by 2020, the per capita disposable income of rural

residents was less than 40% of that of urban residents,

while the per csapita consumption expenditure

reached more than 50% of that of urban residents. The

growth rate of per capita consumption of rural

residents was also greater than that of urban residents.

In terms of the ratio of per capita consumption

expenditure to per capita disposable income

(consumption rate), the consumption rate of urban

residents decreased year by year, from 68.58% in

2015 to 61.61% in 2020, while the consumption rate

of rural residents remained stable at more than 80%,

and reached the peak 83.19% in 2019.

Ye, S.

Consumption Structure Problems and Optimization Strategies of Low-income Population in China’s Rural Areas.

DOI: 10.5220/0011173800003440

In Proceedings of the International Conference on Big Data Economy and Digital Management (BDEDM 2022), pages 275-280

ISBN: 978-989-758-593-7

275

Table 1: Income and expenditure of urban and rural residents from 2015 to 2020, website of China National Bureau of

Statistics - Statistical Bulletin over the years(Website of the National Bureau of Statistics 2021).

Urban residents Rural residents Rural / urban (%)

Year

Per capita

disposable

income

Per capita

consumption

enditure

Consumption

rate

Per capita

disposable

income

Per capita

consumption

enditure

Consumption

rate

Income Consumption

2015 31195 21392 68.58% 11422 9223 80.75% 36.61% 43.11%

2016 33616 23079 68.65% 12363 10130 81.94% 36.78% 43.89%

2017 36396 24445 67.16% 13432 10955 81.56% 36.91% 44.81%

2018 39251 26112 66.53% 14617 12124 82.94% 37.24% 46.43%

2019 42359 28063 66.25% 16021 13328 83.19% 37.82% 47.49%

2020 43834 27007 61.61% 17131 13713 80.05% 39.08% 50.78%

1.2 Higher Overall Consumption Rate

of Rural Residents in

Poverty-Stricken Areas, Resulting

in the Difficulty to Build a

Sustainable Consumption Model

In recent years, the income of residents in poverty-

stricken areas has increased year by year, with the

increasing consumption. From 2015 to 2019, the per

capita income of rural residents in poverty-stricken

areas increased from RMB 7,653 to RMB 11,567.

With the growth of income, the per capita

consumption expenditure of rural residents in

poverty-stricken areas also increased from RMB

6,656 to RMB 10,011. In terms of residents'

consumption rate, the consumption rate of rural

residents in poverty-stricken areas has remained

above 85% from 2015 to 2019, with about 5% higher

than the national per capita consumption rate of rural

residents in the same period, about 20% higher than

the consumption rate of urban residents in the same

period, including 16% higher than the national

average consumption rate in 2019. In 2019, the per

capita disposable income of rural residents in

poverty-stricken areas increased by RMB 1,196 and

the consumption expenditure increased by RMB

1,055. The overall consumption rate of residents in

poverty-stricken rural areas was too high and the

balance was too small, which will seriously affect

their savings and investment and reduce their ability

to deal with risks in the future. The current urgent

demand for consumption expenditure of rural low-

income population has almost exhausted all their

income. They can not plan long-term consumption

and investment plans, but can only choose short-

sighted consumption behavior.

Table 2: Income and expenditure of rural residents in poverty-stricken areas (data source: calculated based on the relevant

data of China Rural Poverty Monitoring Report over the years)( Household Survey Office of the National Bureau of Statistics

2020).

Income and expenditure

uan /

erson

)

2015 2016 2017 2018 2019

National average in

2019

Per capita disposable income 7653 8452 9377 10371 11567 30733

Per capita consumption

enditure

6656 7331 7998 8956 10011 21559

Food, tobacco and alcohol 2411 2567 2689 2808 3121 6084

Clothing 405 423 453 488 549 1338

Dwelling 1376 1543 1695 1995 2173 5055

Daily necessities and services 411 448 485 537 585 1281

Traffic communication 693 803 935 1045 1200 2862

Education, culture and

entertainment

680 790 883 1017 1163 2513

Medical care 567 638 725 919 1054 1902

Other supplies and services 114 118 134 147 166 524

Balance of payments 997 1121 1379 1415 1556 9174

Consumption rate (%) 86.97 86.74 85.29 86.36 86.55 70.15

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1.3 Weaker Consumption Ability of

Low-income Population in Rural

Areas

In recent years, the proportion of national residents'

expenditure on food, tobacco, alcohol and other

necessities of life has decreased year by year,

including rural residents in poverty-stricken areas, the

Engel coefficient of residents has been declining, and

the living conditions of residents have been greatly

improved. However, the proportion of food, tobacco

and alcohol expenditure of rural residents in poverty-

stricken areas in the total personal consumption

expenditure was still higher than the national average.

In 2019, for example, 28.8% of the per capita

consumption expenditure of residents in China was

spent on food, tobacco and alcohol, while the

expenditure of rural residents spent on food, tobacco

and alcohol in poverty-stricken areas accounted for

31.2%. in terms of consumption, continuously

reducing the expenditure proportion of this project

can better reflect the improvement of the living

conditions of the poverty-stricken people. However,

this does not mean that the excessive proportion of

food, tobacco and alcohol expenditure of specific

population is unreasonable. In terms of ratio, the

expenditure on food, tobacco and alcohol of rural

residents in poverty-stricken areas in 2019 was higher

than the national average, and there seems to be room

for reduction of this expenditure of poverty-stricken

population. However, in terms of specific amount, the

per capita expenditure on food, tobacco and alcohol

of residents in China was RMB 6,084, while that of

rural residents in poverty-stricken areas was only

RMB 3,121, with an average of about $1.3 per person

per day. The higher food expenditure ratio and lower

actual amount of low-income population just show

that their consumption ability is weak and they have

to spend a considerable part of their consumption on

survival expenses.

Table 3: Breakdown proportion of consumption expenditure of rural residents in poverty-stricken areas (Annual Report on

Income Distribution of Chinese Residents 2020).

Proportion of various

consumption items (%)

2015 2016 2017 2018 2019 Trend

National

average in 2019

(%)

Per capita consumption

enditure

100 100 100 100 100 — 100

Food, tobacco and alcohol 36.22 35.02 33.62 31.35 31.2 ↓ 28.8

Clothing 6.08 5.77 5.66 5.45 5.5 ↓ 6.2

Dwelling 20.67 21.05 21.19 22.28 21.7 — 23.4

Daily necessities and services 6.17 6.11 6.06 6.00 5.8 ↓ 5.9

Traffic communication 10.41 10.95 11.69 11.67 12.0 ↑ 13.3

Education, culture and

entertainment

10.22 10.78 11.04 11.36 11.6 ↑ 11.7

Medical care 8.52 8.70 9.06 10.26 10.5 ↑ 8.8

Other supplies and services 1.71 1.61 1.68 1.64 1.7 — 2.4

1.4 Increasing Expenditure Pressure

on Non-Necessities Year by Year

For the consumption expenditure of rural residents in

poverty-stricken areas, this article takes the data of

2019 as an example. In terms of the actual amount of

expenditure, the expenditure of most projects was

less than 50% of the national average level, and only

the expenditure on food, tobacco and alcohol and

medical care barely reached more than 50% of the

national average level. In terms of the proportion of

various expenditures, the proportion of expenditure

on food, tobacco, alcohol, medical and health care of

rural residents in poverty-stricken areas exceeded the

national average consumption level. The items with

single consumption expenditure accounting for more

than 10% included food, tobacco and alcohol,

housing, transportation and communication,

education, culture, entertainment and medical care in

order from high to low. The total proportion of these

five items reached 87%. The pressure on the growth

of consumption expenditure of poverty-stricken

residents mainly comes from transportation and

communication, education, culture, entertainment

and medical care. In most years, the growth rate of

these three expenditures was much higher than that of

total consumption expenditure and per capita

disposable income. The above data show that the

expenditure pressure on non-necessities of life of

rural residents in poverty-stricken areas is increasing

year by year.

Consumption Structure Problems and Optimization Strategies of Low-income Population in China’s Rural Areas

277

Table 4: growth rate of income and expenditure of rural residents in poverty-stricken areas compared with the previous year

(data source: calculated based on the relevant data of Annual Report on Income Distribution of Chinese Residents 2020).

Growth rate of income and

enditure (%)

2015 2016 2017 2018 2019

Per capita disposable income 11.69% 10.44% 10.94% 10.60% 11.53%

Per capita consumption expenditure 10.80% 10.14% 9.10% 11.98% 11.78%

Food, tobacco and alcohol 9.74% 6.47% 4.75% 4.43% 11.15%

Clothing 9.46% 4.44% 7.09% 7.73% 12.50%

Dwelling 10.61% 12.14% 9.85% 17.70% 8.92%

Daily necessities and services 7.59% 9.00% 8.26% 10.72% 8.94%

Traffic communication 12.68% 15.87% 16.44% 11.76% 14.83%

Education, culture and entertainment 15.25% 16.18% 11.77% 15.18% 14.36%

Medical care 10.96% 12.52% 13.64% 26.76% 14.69%

Other supplies and services 15.15% 3.51% 13.56% 9.70% 12.93%

2 ANALYSIS ON THE CAUSES

OF UNREASONABLE

CONSUMPTION STRUCTURE

OF LOW-INCOME RESIDENTS

IN RURAL AREAS

2.1 The Consumption Choice of

Low-income Population Is Not

Scientific Enough

In terms of the choice of different consumer goods,

the purchasers bought goods with high price but

poverty-stricken quality under the publicity of

merchants due to the limitation of the total short-term

disposable income and the lack of grasp of relevant

knowledge. In the short term, the poverty-stricken

people will spend less on these commodities and the

consumption pressure will be low. However, the

durability of such commodities is not enough, and

consumers need to speed up the replacement cycle of

supplies and spend repeatedly on similar

commodities. In the long run, the poverty-stricken

people may spend more on such goods than the non

poverty-stricken people, resulting in increased

expenditure pressure on the poverty-stricken people.

In terms of different types of consumption behavior

choices, the poverty-stricken people may prefer

consumer goods that can immediately bring

themselves a certain sense of satisfaction, rather than

making more pragmatic choices. This short-sighted

impulse consumption will inevitably lead to the

compression of the expenditure on necessities of life

of the poverty-stricken people, or lead to the further

reduction of the annual balance. Finally, it is even less

possible for them to make scientific consumption

planning choices.

2.2 Individual Imitation Caused by

Population Consumption Habits

In terms of the choice of consumption behavior, there

is phenomenon of follow-suit consumption. For

example, in terms of the consumption of household

appliances, the activities of home appliances to the

countryside were carried out all over the country

many years ago, "so that farmers' home appliance

consumption is in advance, and farmers under credit

constraints must reduce the current consumption of

other products. (

Zheng 2012, Jiang 2012, Lin 2012)Due

to the mode of subsidized purchase, some rural

families possess durable consumer goods that exceed

their consumption level in advance. In 2019, the

number of major durable consumer goods per 100

households of rural residents in China at the end of

the year is very close to the average level of rural

areas in China. In 2019, the per capita disposable

income of rural residents in China was RMB 16,021,

and the per capita income of rural residents in

poverty-stricken areas in China was RMB 11,567 in

the same year. In case that the actual purchasing

power of some poverty-stricken families is

insufficient, the follow-suit consumption in

household appliances deprives the normal

consumption expenditure of the families and affects

the satisfaction of other consumption needs of family

members.

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Table 6: Ownership of major durable consumer goods per 100 households of rural residents and residents in poverty-stricken

areas in 2019 (data source: China Rural Poverty Monitoring Report 2020).

Consumer goods

category

Ownership of major

durable consumer

goods per 100

households of rural

residents at the end of

2019

Ownership of major

durable consumer

goods per 100

households of rural

residents in poverty-

stricken areas in 2019

Ownership of major

durable consumer

goods per 100

households in

contiguous poverty-

stricken areas in 2019

Ownership of durable

consumer goods per

100 households in

rural areas of key

poverty alleviation

counties in 2019

Household car

(

set

)

24.7 20.2 19.6 19.9

Washin

machine

(

set

)

91.6 90.6 90.8 90.4

Refri

erator

(

set

)

98.6 92.0 91.5 91.6

Mobile phone

(

artment

)

261.2 267.6 272.0 266.8

Com

uter

(

set

)

27.5 17.7 16.5 18.0

2.3 Location Disadvantage Leading to

the Rise of Consumption Costs

Based on the China Rural Poverty Monitoring Report

published in 2020, by 2019, except for a few areas in

Qinghai and Jilin, all natural villages where poverty-

stricken households live have been connected by road

and telephone, and the main roads to more than

99.5% of the natural villages where poverty-stricken

households live have been hardened. The proportion

of farmers who can take buses in the natural villages

where the poverty-stricken areas are located is 76.5%,

only 55% in Guangxi. In some remote villages, with

relatively small population and long transportation

distance, residents can travel only by renting cars,

cluster carpool, or motorcycles by themselves. This

increases the consumption expenditure of travel. For

consumer goods purchased by rural residents, except

for some agricultural products directly produced in

the region, with the relatively low price, the prices of

other commodities are basically the national unified

price system. In addition to the profits of distributors

and transportation costs, the prices of consumer

goods in rural market towns are not lower than those

in large and medium-sized cities.

2.4 Failure of Credit Mechanism

Resulting in the Inability to Plan

Long-Term Consumption

The current banking system has high requirements for

residents' credit. Fixed income, personal or family

property status and expenditure status are important

references to review whether the conditions of credit

granting are met. Rural residents in poverty-stricken

areas do not know enough about credit, do not have a

good understanding of credit, do not dare to borrow,

worry about being unable to repay when due, and it is

not cost-effective to pay interest. Some people also

think that the procedures are too cumbersome to

handle.

3 OPTIMIZATION STRATEGY

OF CONSUMPTION

STRUCTURE OF LOW-

INCOME RESIDENTS IN

RURAL AREAS

3.1 Establishment of an Ecological

Lifestyle of Controlling

Consumption

The consumption behavior of rural low-income

population is guided and standardized with moderate

consumption morality, and people's arbitrary

consumption and excessive consumption are

prevented and controlled. "Moderate" appropriate

consumption concept is cultivated to stop irrational

desire consumption behavior in time. Publicity and

education are strengthened, cultural popularization is

expanded, ideological understanding is improved,

and the awareness of self-moral restraint of rural low-

income population is constantly strengthened to

promote the formation of rational consumption

patterns. Furthermore, the contradiction between

savings shortage and bad consumption habits among

low-income population are eliminated.

3.2 The Government Increased the

Supply of Public Goods in Rural

Areas

The relative shortage of public goods supply is bound

to increase the consumption cost in rural areas and

restrain the consumption demand and consumption

ability of farmers, especially low-income population.

Consumption Structure Problems and Optimization Strategies of Low-income Population in China’s Rural Areas

279

From the last kilometer of poverty alleviation road to

the last kilometer of rural revitalization, infrastructure

is the key. These infrastructures include hardware

transportation, communication, Internet coverage,

water and electricity for production and life, as well

as the equalization and sinking of educational

services, high-quality medical resources of the grass-

roots society, and the construction of adequate

pension and other social security systems. Whats

more, this article explores a reasonable path to

implement the construction of residents' consumer

and operational credit system in rural areas.

3.3 Construction of An Intensive

Commodity Sales Network

Many rural residents have low educational level and

insufficient ability to identify commodity quality and

function. The use and maintenance of various

commodities need to seek after-sales support from

merchants. They are in lack of bargaining power for

commodity price and after-sales guarantee. Merchant

are in a strong position in the rural sales network.

Local governments should guide all kinds of online

and offline formal commercial entities to step into the

rural market, and increase the promotion of a mature

large-scale online and offline sales system to cover

counties and townships and extend to rural areas. A

comprehensive business supermarket system is built

at the county and township levels, the professional

operation capacity is improved, and the after-sales

service system is optimized. Costs are reduced and

sales service quality is improved by means of

systematization, specialization and integration.

3.4 Optimization of Individual

Expenditure Structure

Education on residents' rational planning and

personal and family consumption is strengthened, and

residents are guided to take action to effectively

reduce unreasonable expenses and optimize other

kinds of expenses. The production and life of rural

residents are integrated, and many consumer needs

can be met by self-sufficiency. The restoration and

development of courtyard economy in rural areas

should be promoted, and consumer should be

provided with goods for household needs in the form

of independent production. Technicians should be

selected to guide farmers to make full use of land

resources and family resources, so as to appropriately

plant products that can produce certain economic

benefits.

4 CONCLUSIONS

Managers should take the initiative to understand

macro statistical data, and conduct data analysis

according to the situation of the region, to understand

the actual consumption status of rural residents in the

region. And use the big data resources provided by

various Internet platforms to guide the planting of

agricultural products, supply of consumer goods and

distribution of commercial outlets. The

synchronization of farmers' products into the market

and consumption behavior should be promoted. A

reasonable household consumption system should be

built. We should apply for credit from financial

institutions appropriately, plan premature

consumption demand steadily, and reduce the

pressure of emergency expenditure on household

property.

FUND PROJECT

"Research on wealth ethics strategy of targeted

poverty alleviation" of 2017 western project of

National Social Science Foundation of China

(17XKS010)

REFERENCES

Department of employment and income distribution,

national development and Reform Commission,

Annual Report on Income Distribution of Chinese

Residents 2020, Beijing: Social Sciences Academic

Press, May 2021, page 152.

Household Survey Office of the National Bureau of

Statistics, China Rural Poverty Monitoring Report

2020, Beijing: China Statistics Press, December 2020,

pages 312, 300, 309, 336, 354 and 310.

Website of the National Bureau of Statistics - Statistical

Bulletin over the years,

http://www.stats.gov.cn/tjsj/tjgb/ndtjgb/ (reference

date: August 7, 2021).

Zheng Xiaoting, Jiang Yi and Lin Huang. Does public

finance subsidize specific consumer goods to promote

consumption?—— Evidence from pilot counties of

"home appliances to the countryside", Economics,

2012, Issue 4,pages 1323.

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