Income and social inequality in China: impact on consumption and shopping patterns

Since the “open‐door” policy was introduced in 1978, China’s socio‐economic development has been impressive, and the standard of living of its approximately 1.2 billion population has generally improved. However, with the rapid economic development and technological advancement comes the inevitable income and social inequality between urban and rural residents as well as among the populace in different regions of China. The disparity in consumption and shopping patterns between higher income and lower income consumers, as well as the recent deflation and “premature consumption psychology” phenomenon in China, have become major challenges for existing shopping centers, and the development of the retail sector as a whole. Based on official data from 1991 to 1998 and empirical evidence from a 1998/9 study, this paper examines the differences in consumption and shopping patterns among consumers in China and discusses the reasons behind such disparity.