Impacts of urban-rural income gap on consumer demand in China

Under the background of China's current economic development, this paper brings forward the urgency for discussing the impact of China's urban-rural income gap (IG) on Residents' consumption demand (CD), and summarizes and describes the research methods and research ideas of the problem.First of all, the IG and consumption of urban and rural residents(URR) in China are analyzed quantitatively, then the Keynes' absolute income hypothesis was used as the basis of theoretical research.Then by constructing time series and establishing co-integration model to verify the specific mechanism of IG on consumption, and according to the time phase changes to focus on analysis.Finally, it is concluded that the widening of IG between URR in China is not conducive to the growth of CD, and the influence coefficient of IG on consumption in the early stage is smaller than that of IG on consumption in the later stage of economic development.Therefore, this paper proposes to deepen the reform of income distribution, improve social security and other social systems, increase the income of rural residents (IRR), reduce the IG between urban and rural areas(URA), and promote the progress of urbanization, taking into account the actual situation in China.Rational use of labor force transfer to narrow the IG between URA, thus promoting rapid economic development in China. Keywords-urban-rural income gap; consumption demand; average consumption propensity; marginal consumption propensity I.Meanwhile, the urban-rural IG has been increasingly widened.Besides, people's consumption has attracted growing attention.Relevant statistics from National Bureau of Statistics of China shows that the Gini coefficient has risen from 0.317 in 1978 to 0.462 in 2015, which has already surpassed the international warning threshold of 0.4.It illustrates that China's