The Characteristics，Measurement and Development of China's Consumption Upgrade

Abstract：With the development of China’s economy，the trend of China’s consumption upgrade is increasingly obvious； and we can analyze consumption upgrade in China from such four perspectives as characteristics，measurements，potential problems and future development. During the past several years，the urban- rural consumption gap has been narrowed，the demand for service and quality has been growing rapidly，and the contribution of consumption to economic growth has been significant. With the help of the extended linear expenditure system（ELES）model，the authors divide the residents' consumption structure into general merchandise and high-level commodities，get the income elasticity of demand，and make the change in the proportion of the consumption expenditure of high level goods and services as a measurement of household consumption upgrade. It is estimated that the consumption of goods and services in the higher level of Chinese residents has been increased by nearly 3 percentage points compared with 2013. In addition，the authors point out that there are such problems in the process of upgrading as low consumption rate，insufficient service consumption，and rapid increase of household debt ratio. So we should，on one hand，further deepen market-oriented reforms，fill the service supply gap，promote the return of high-end consumption；on the other hand，we should reform the income distribution mechanism，strictly control the residents debt，and improve the contribution of consumption to economic growth.

Key words：consumption upgrade；the residents' consumption structure；measurement；the income elasticity of demand