Peasants' Income and Consumption Structure Contrasting: A Case Study on China s Sichuan Province

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1 Internatonal Journal of Economcs and Fnance Vol. 3, No.3; August 2 Peasants' Income and Consumpton Structure Contrastng: A Case Study on Chna s Schuan Provnce Tao L College of Economcs Management, Schuan Agrcultural Unversty No.22, HuMn Road, Wenjang Dstrct, Chengdu 63, Chna E-mal: jnyytyw@qq.com Dongme L (Correspondng author) College of Economcs Management, Schuan Agrcultural Unversty No.22, HuMn Road, Wenjang Dstrct, Chengdu 63, Chna E-mal: cndldm@63.com Receved: October 5, 2 Accepted: November 2, 2 do:.5539/jef.v3n3p242 Abstract Ths paper analyzed the ncome and consumpton structure of the rural resdents n Chna's Schuan provnce from 23 to 29. Grey relatve analyss model was used n ths study; The research also predcted Schuan peasants' ncome and varous consumers spendng from 2 to 22 wth G, model and contrasted the change of consumpton structure characterstc fore-and-aft 28. The result shows that the ncome change s relatve to peasants' productve outlays, taxes and resdence obvously n Schuan. Ther productve outlays are short, foodstuff and clothng consumpton have a large proporton, and the characterstc of ther consumpton structure s stll daly lfe type. Keywords: Gray system, Peasants' ncome, Consumpton structure, Schuan provnce. Introducton For a long tme, Urban-rural dual economc structure has been a specal socal structure n Chna. It s an economc structure wth the man characterstcs of socalzed producton n the urban economy and the man characterstcs of small-scale producton n rural economy. Chna s urban-rural dual polcy manufacture varous nequalty, the populaton s dvded nto two parts whch named rural resdents and urban resdents. Ths classfcaton makes the Chnese have dfferent benefts from the brth, people born n urban have a better lfe startng from hs brthday than n the countrysde. These dfferences and nequaltes cause more and more conflcts n recent years. For example, t makes the rural areas conflct wth the urban areas, and leads to the famous Three Agrcultural Problems. More and more attenton s focused on the Three Agrcultural Problems, especally the problem of peasants' ncome. In recent years, the gap of urban-rural ncome n Chna s wdenng whch from 2.56/ n 978 to 3.33/ n 29. So t has great practcal sgnfcance to research the factors that affectng the ncome and consumpton of the peasants and ncreasng peasants' ncome. Schuan s a typcal agrculture and servces output provnce whch located n the southwest of Chna, wth mllon populatons by the end of 29. The mllon non-agrcultural populatons and mllon agrcultural populatons make up almost 25.45% and 74.55% respectvely of the total populaton. On one hand, Chnese government began to plot Chna s Home Applance Subsdy Program for Rural Areas Polcy frstly n Schuan n December 27 and t greatly droved rural consumpton market development n Schuan. On the other hand, as we all know, a terrble earthquake stroke WenChuan n Schuan Provnce n 28. A seres of the country polces have been launched to mprove people s producton and lvng standards, whch made a hgh stmulaton for the rural consumpton market n Schuan. In these macro background, analyzng and forecastng the correlaton sze between ncome and consumpton structure of rural resdents n Schuan fore-and-aft 28 may has mportant theoretcal and realstc sgnfcance. Many projects about peasants' ncome and consumpton have been studed by many scholars at home and abroad. Wu, Xumng, Perloff and Jeffrey M., & Golan, Amosuy (24) studed government polcy effects on urban and rural ncome nequalty by usng the data from 98 to997, ther results showed that government s polces have qualtatve smlar but quanttatvely dfferent effects on rural and urban areas; margnal ncome tax rates and the 242 ISSN 96-97X E-ISSN

2 Internatonal Journal of Economcs and Fnance Vol. 3, No. 3; August 2 earned ncome tax credt play a more mportant role n equalzng ncome than do the other government programs n both areas; and ncome nequalty measures for rural and urban areas have recently dverged. Albert Kedel (29) dvded Chna nto seven regons reveals rural ncome and consumpton dvergence for both and He argued that more meanngful measures of regonal dspartes come from dfferences n regonal poverty headcounts, and suggested that hgher regonal nequalty and accompanyng nterregonal mgraton ndcated that nequalty plays an mportant postve role n nducng economc actors voluntarly to move to more productve locatons and actvtes as a mechansm for ensurng sustanable mprovements n ndvdual well-beng. The study of We Xu, Yongyuan Yn and Suoquan Zhou (27) revealed that soco-economc changes assocated wth the government-fnanced project are multfaceted and profound, and the land converson project wth contnued fnancal support also contrbutes to the socal transformatons of tradtonal rural socety n remote areas to a more moble, less subsstence agrculture-based, and open socety. Researches on Chna s rural households' ncome and consumpton structure have focused prevously on two ndependent aspects: nfluence factors and countermeasures of peasants' ncome and peasant's consumpton factor analyss. In the frst aspect, experts concluded that the man factors nfluencng peasants' ncome were prce scssors, educaton degree of peasants, government s countrysde-supportng polcy factors and rural socal securty system (Ln L, 26; Chunhua Wang, 28; Jngjng Tong, 27; Xusheng Zhang & Xaomng Ma, 29). Mngfeng He (28) used the labor model analyzed the ncome of peasants n the rural areas of Chna. He found that a decson s made based on workng ablty and the nformaton that a peasant gets. A multvarate evolutonary model about ths problem s establshed and the numercal smulaton shows that gong to the cty brngs about a rse n the peasants' ncome. Zhaobo Lu (29) establshed an error correcton model (ECM) to analyze the factors nfluencng peasant s consumer behavor; the result concluded that the uncertanty, excess senstvty and the lfe cycle characterstcs of peasant s consumer behavor are the most mportant factors that affect peasant s consumer behavor. Jng J (2) held that Chna s rural socal securty for peasants have a weak postve correlaton wth peasant s consumer spendng n long-term and an nhbtory effect nhbton n short-term. The foregong studes provde a lot of essental nformaton on the peasants' ncome and consumpton. However, these researches and other exstng works only focused on the ndependent aspects, there s no specfc study has done on both peasants' ncome and consumpton structure combnng research. In addton, the earthquake ncreased many uncertan factors to peasants' ncome and consumpton structure. Therefore the objectve of ths paper s to analyze, and fnd out the factors nfluencng ther behavors both on the macrocosmc and mcrocosmc level. We fnally conclude the paper by offerng a wder range of suggestons that not only helpful to government, but also to peasants and companes. 2. Methodology and Materals Accordng to nternatonal practce, the quantty of nformaton s explaned by color depth n cybernetcs. Whte means suffcent and sure (known) nformaton, whle black s stand for lackng of nformaton or uncertan (unknown), and part of certanty and parts of uncertanty s for the grey. Those systems who have known and unknown parameters are gray systems. Gray system contans known and unknown nformaton (or the unascertaned nformaton). The prmary msson of grey system theory s to propose the new deas and methods of modelng for a gray system whch s wth nformaton loss on the whole from the angle of cybernetcs. It was publshed by Deng Julong n Grey relatve analyss Gray Relatve Analyss Method (GRAM) s a factor comparatve analyss whose essence s to analyze the development and change trend. Its relatve degree s measured by the dfference value of curve. Through the analyss of correlaton, we can fnd out the man factors whch mpact the development of key varables. The steps are as below. X t) x (), x (2),..., x ( ), and sequence ( n Frstly, we select reference sequence X ( t) { x (), x (2),..., x ( n)} for comparson. Equaton () s called the related coeffcent between sequences X t '. X t' and ( k ) mn mn x ( k) x ( k) max max x ( k) x ( k) k k x ( k) x ( k) max max x ( k) x ( k) k Where s resoluton coeffcent, generally beng selected between and. where there s a bgger, there s a Publshed by Canadan Center of Scence and Educaton 243

3 Internatonal Journal of Economcs and Fnance Vol. 3, No.3; August 2 hgher resoluton, vce versa. So the average related coeffcent of sequence subsequence ' X t. Denoted by X t to compare sequence ' X t' n each tme s called the correlaton whch s N r ( k) N 2 k 2.2 Gray systematc predctng model Gray systematc predctng model (GM) establshed on the bass of the grey system theory. General GM model s a n-order and h-varable dfferental equaton model, abbrevaton for GM (n,h). GM, s an one-order ordnary T T dfferental equaton model aˆ ( B B) B Y N, supposng there s an orgnal data column X ( k) { x (), x (2),..., x ( n)}, after an accumulated generatng operaton (AGO) we can get X ( k) { x (), x () x (2),..., x ( n ) x ( n)}. Then X can be establshed as the dfferental equaton n standard form as follows: We mark Parameters lsted wth â, Calculatng â accordng to the least-square method, we can get the soluton of the dfferental equaton n standard form as follows: u u xˆ ( k ) x () e ak a a (5) Thus, a forecast model s establshed. 2.3 Data Accordng to the scope of statstcs, peasants' consumer spendng was consttuted by ndexes, they are Expendture for household busness, Expendture on purchasng productve fxed assets, Taxes, Food, Clothng, Resdence, Household facltes & artcles and servces, Medcne and medcal servces, Transportaton and communcatons, Cultural, educatonal & recreatonal artcles servces and Other commodtes and servces. The Three Agrcultural Problems gradually beng take serously snce 2, consderng the natonal polcy s nfluence on rural ncome & consumpton level and ts hysteretc characterstcs, data for the study was based on tme-seres from 23 to 29(Table ). ndces data were select from the Schuan statstcs yearbook (24-2). Frstly, ths paper presents a quanttatve analyss of the peasants' consumpton structure wth grey relatonal analyss method. Then to move forward a sngle step, we use grey systematc predctng method to establsh the consumpton expendture predctng model, and predcate the consumpton data from 2 to 22 (Table 2). 3. Results and dscusson 3. Model analyss and predcton Frstly, we wll do the grey relatve analyss, dmensonless process the data column, calculate correlaton coeffcent ( k) and calculate the ndex relatonal accordng to formula. Results are lsted n table 3. Secondly, we predct the ncome and expendture. In order to reflect the dynamc nfluence of peasants' ncome to consumpton structure, we need to predct the ncome and expendture data n Schuan provnce accordng to the exstng data. So establshng the foregong sequence s gray systematc predctng model s ndspensable, each sequence s GM (, ) models are as follows: Annual ncome Y Famly busness expenses a dx dt a u Expendture on purchasng productve fxed assets b Taxes c Food d ax u â (4) Y ( k ) e a ( k ) e b ( k ) e c ( k ) 223.2e d ( k ) 68.49e.73k.88k.2766 k.82 k.932k (3) 244 ISSN 96-97X E-ISSN

4 Internatonal Journal of Economcs and Fnance Vol. 3, No. 3; August 2 Clothng e Resdence f Household facltes & artcles and servces g Medcne and medcal servces h Transportaton and communcatons Cultural, Educatonal and recreatonal artcles servces j Other commodtes and servces k e ( k ) e f ( k ) 63.2e g ( k ) e h ( k ) 75.7e ( k ) e j ( k ) e k ( k ) e.48 k.462 k.987 k.54 k.643 k.284k.4 k Through Resdual Test and Posteror-varance-test, the model s the accordance wth the forecast rule, and the valdty, feasblty and sutablty, can be used to predct. Predctng result s lsted n table 2. Thus we obtan the peasants' ncome and consumer spendng of Schuan provnce between 23 and 22. To reveal the data s characterstcs n dfferent stages scentfcally, we dd a stage dvson before comparatve analyzng. Consderng the research purpose and the nfluence of macro background, these data were dvded nto two phases: and Repeatng the grey relatonal analyss, we can get assocated as grey relatonal analyss results (Table 4). 3.2 The results and analyss From table 4, we can see clearly that the grey relatonal grade of famly busness expenses and expendture on purchasng productve fxed assets presents downward trend. That s to say, wth the ncrease of peasants' ncome, ther nvestment on agrcultural producng and managng relatve decrease. The reasons are as follows: Schuan s a bg labor output provnce whose agrculture s n an nferorty status. Especally after the earthquake, the rural famly need self-rased funds of reconstructon, t make most tradtonal young male labors go out to work for money. The old men left for farmng only farm the land of ther own, even gve ther land to others for free or let them fallow. Ther land producton and management are only to ensure the basc lfe, and ther man famly ncome source s outdoor-workers wages. The relatonal sequence of peasants' ncome and resdence consumpton drastcally drop from 5th to th, the possble reason s that the central government offered lots of housng constructon materal support after the earthquake to safeguard natonal people s lvelhood. And house s real estate whose servce lfe s longer than the average consumer goods. Along wth the ncrease of peasants' ncome and optmzaton of consumpton structure, peasants request more comfortable lvng envronment and ther consumpton focus are transform from quantty to qualty. The relatonal sequence of peasants' ncome and household facltes & artcles & servces make a clear ascendant trend, from.734 to.822, but ts sequence remans unchanged. It clearly state that Chna s Home Applance Subsdy Program for Rural Areas polcy played an mportant role n pullng the rural consumpton, mprovng rural people s lvelhood, puttng energy conservaton and emsson reducton nto effect and perfectng rural producton and crculaton system. But ts growth has been weakly mpact by the growth of ncome, statng clearly there are stll many problems n the process n the mplementaton of the polcy. Generally speakng, the consumpton of peasants n Schuan s stll shows basc lfe consumpton characterstcs, food and clothes consumpton represent a sgnfcant proporton (Sortng by former); medcne & medcal servces, transportaton and communcatons and educatonal and recreatonal artcles servces turn up certan ncrease, they wll be the consumpton hotspot n followng years. The man reason of the phenomenon s peasants lvng standards mproved sgnfcantly n recent years (The rse of taxes and ncome' grey correlaton degree sortng, from the last to 8th powerful explans t), and peasants' safety awareness to the product qualty and safety also mproved. Educaton expenses ncreased, demonstratng peasants pay more and more attenton to educaton, not only on ther chldren but also on qualty of themselves. Ther demand s gradually changng from the materal consumpton demand to the mental. Other commodtes and servces spendng rse to second. It s a sgn that a seres of changes wll occur on peasants' consumer content, consumpton pattern and consumpton concept wth the ncrease of peasants' ncome. 4. Dscusson and Conclusons Ths paper developed a theoretcal framework to analyze the change of ncome and consumpton structure fore-and-aft Earthquake n Schuan Chna. The Grey relatve analyss and gray systematc predctng model were used to analyze the peasants' consumpton structure and ts nfluencng factors. The results ndcate that the contemporary rural land polces adopted n Chna actually placed agrculture n a secondary poston n the Publshed by Canadan Center of Scence and Educaton 245

5 Internatonal Journal of Economcs and Fnance Vol. 3, No.3; August 2 urban rural dchotomous economy. The correlaton grades of Schuan peasants' productve outlays, taxes and resdence relatve to ncome change obvously. Concretely speakng, ther productve outlays s short, foodstuff and clothng consumpton take a bg proporton, and the characterstc of ther consumpton structure s stll daly lfe type. After the earthquake, the mentalty of rural resdents had undergone some changes. They pay more attenton to ther health, the qualty of lfe, culture & entertanment and educaton expendtures. Notable changes have taken place n peasants' ncome and consumpton structure correlatve, and a seres of problems can be deduced from these changes, such as the nsuffcent agrcultural producton force and unreasonable consumpton structure. But n general, Chna s macroeconomc envronment stll affect the rural consumpton market n Schuan provnce, the basc lvng cost has played a large proporton of the peasants' consumpton. On the other hand, Peasants' ncome growth s slow, the dfference n the urban-rural ncome gap has wdened, wth 9,64 Yuan, or around $,4 U.S. dollars, formng the bggest average per capta gap snce 978. Under such crcumstances, the government should meet wth tough challenges such as who wll take up farmng n the future and how to promote the urbanzaton of peasants. Therefore, we should focus on that how to make the post-dsaster reconstructon of rural economy more scentfc and formulate measures to transform Chnese peasants' tradtonal consumpton dea. We argue that the government should contnue to unvel fresh preferental polces whch encourage peasants to consume, and adjust the rural consumpton market product structure n order to adapt to the pluralstc demand tendency vllage people. Meanwhle, Chna s rural socal securty s a neglected problem, f ths problem cannot be solved; peasants' consumpton s dffcult to ascend. These are worthy to be further researched topcs. As ths paper focused only on Schuan provde, t s unable to speak volumes for explanng the general stuaton n Chna. Ths s thus a major lmtaton of ths work. Nevertheless, as the fndngs and suggeston provde useful nformaton, t wll help provde better understandng of the general stuaton of the country. References Albert Kedel. (29). Chnese Regonal nequaltes n Income and Well-beng: Revew of Income and Wealth,Seres 55, Specal Issue. CHEN, xanyn. (24). Impact of Educaton on Sustanable Income Growth of Chnese Farmers: Journal of Agrotechncal Economcs, 6, DENG Julong. (985). Gray Controllng System. (rd ed.).wuhan: Huazhong Polytechnc College Press (n Chnese). HE, Mngfeng, Chuan L, Tong Tong and Ma, Tanlang. (28). A Model of Peasant Labor n Chna. Physcal A: Statstcal Mechancs and ts Applcatons,, HU, Xuepng. (23). Optmzes Consumpton Envronment of Rural and Enlarges Farmers' Consumer Demand: ISSUES IN AGRICULTURAL ECONOMY, 6, HE, Xanpng, CHEN, suo. (29). The Substantal Evdence Study for the Implementng Effect of Chnese Agrculture Polcy: Statstcs and Decson, 6, JI, Jng. (2). The Influence of the Socal Securty on the Consumpton Expendture of Rural Resdents: Human Resource Management, 4, LIU, Zhaobo. (26). The Study on Present Farmers' Consumpton Behavor: FINANCE & ECONOMICS, 6, WU, Xumng, Perloff, Jeffrey M., & Golan, Amos. (24). Government Polcy Effects on Urban and Rural Income Inequalty: Insttute for Research on Labor and Employment. Retreved from: XU, WYn, YZhou S. (27). Socal and Economc Impacts of Carbon Sequestraton and Land Use Change on Peasant Households n Rural Chna: A Case Study of Lpng, Guzhou Provnce: Journal of Envronmental Management, 3, ZHANG, Xusheng, MA xaomng. (29). Analyss on the Interacton Between Rural Socal Securty System and the Increase of Farmers' Income: Wuhan Unversty Journal(Phlosophy & Socal Scences), 2, ISSN 96-97X E-ISSN

6 Internatonal Journal of Economcs and Fnance Vol. 3, No. 3; August 2 Table Schuan rural ncome and consumpton data Artcle of Consumpton Annual ncome Expendture for household busness Expendture on purchasng productve fxed assets Taxes Food Clothng Resdence Household facltes & artcles and servces Medcne and medcal servces Transportaton and communcatons Transportaton and communcatons Other commodtes and servces Notes: Unt s RMB Yuan. Source: Schuan statstcs yearbook (24-2). Table 2. Predcted data of Schuan peasants' ncome and varous consumers spendng from 2 to 22 Year Y a b c d e f g h j k Notes: Y represents annual ncome, a represents famly busness expenses, b represents expendture on purchasng productve fxed assets, and so on. Unt s RMB Yuan. Source: The data comes from forecastng model operaton. Table 3. Grey relatonal grades of Schuan peasants' varous consumers spendng to ncome from 23 to 29 Artcle of Consumpton a b c d e f g h j k Correlaton value Notes: a represents famly busness expenses, b represents expendture on purchasng productve fxed assets, c represents taxes, and so on. Table 4. Grey relatonal grades of Schuan peasants' varous consumers spendng relatve to ncome and ther rankng Artcle of Consumpton a b c d e f g h j k Rankng Rankng Notes: a represents famly busness expenses, b represents expendture on purchasng productve fxed assets, c represents taxes, and so on. Publshed by Canadan Center of Scence and Educaton 247