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2.5 Resident Real Income Growth was Slowing

and the Growth of Total Retail Sales of Consumer Goods Continued to Fall Back

In 2014, the Chinese residents' per capita disposable income grew by 8.0 % in real terms, a decrease of 0.1 % from the previous year. By permanent residence, the per capita disposable income of urban residents grew by 6.8 % in real terms, a decrease of 0.2 % from the previous year; the per capita net income of rural residents grew by 9.2 %, a decrease of 0.1 % from the previous year (Fig. 2.14). The economic slowdown continued to inhibit the growth of the urban and rural residents' real income.

As the per capita income levels rose, the Chinese residents' consumption structure was undergoing new changes, with the growth of material consumption slowing

Fig. 2.12 Changes in China's export composition (by region) (Data source: CEIC)

Fig. 2.13 Changes in China's import composition (by region) (Data source: CEIC)

Fig. 2.14 Changes in real growth rate of per capita disposable income in urban areas and net income in rural areas (Data source: CEIC)

Fig. 2.15 Changes in real growth rate of consumer good retail sales (Data source: CEIC)

down and proportion of service consumption rising. Influenced by the government's anti-corruption move and restrictions on the three public expenditures, the growth rate of the government's public service spending in general apparently fell. The total retail sales of consumption goods maintained the falling trend since 2010 and then nominally grew by 12.0 %, a decrease of 1.1 percentage points from the previous year; meanwhile the real growth was 10.9 %, a decrease of 1.6 % from the previous year (Fig. 2.15).

2.6 Price Index Continued the Trend of “Double Down,” and the Structural Deflation was Increasing

In 2014, the CPI was 2 %, a decrease of 0.6 % from the previous year, and the PPI fell by 1.9 %, the same as the previous year (Fig. 2.16). Since 2011, China's CPI and PPI continued the “double down” trend, but the growth of CPI remained positive, whereas that of PPI continued the negative trend.[1] The consumer market and intermediate product market faced different downward pressures on the price, and China's deflation revealed obvious structural characteristics.

In terms of CPI, eight types of consumer goods maintained their positive increase, although the rate of increase dropped. The decreasing price of staple commodities such as food and oil was the main reason for the decrease of CPI; the enlarging demand on services, clothing, traffic, communication, entertainment, education,

Fig. 2.16 Year-on-year changes in CPI and PPI (Data source: CEIC)

and culture promoted the increase of CPI.[2] In terms of PPI, excess production capacity and the 2014 slump in oil prices were the main reasons for the drop.

  • [1] This situation is usually defi ned as disinfl ation, rather than defl ation
  • [2] At the end of 2014, the consumer confidence index, customer satisfaction index, and consumer expectations index grew by 3.5 %, 5.4 %, and 2.3 % respectively. From the resident survey data, in 2014, the urban per capita disposable income increased by 2381.6 yuan over the previous year, and the per capita consumption expenditure increased by 1945.4 yuan; the marginal propensity to consume was 81.7 %, an increase of 10.6 % over the previous year
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