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Consumption

Consumers in China today are spending their money on housing, transportation, telecommunications, medical and health care, culture, education and entertainment, leisure and tourism. This is remarkable in that not so long ago basic subsistence was a major concern of many citizens. As expenses for food, clothing and basic necessities dropped, the Engel coefficient (the proportion of food expenses of total consumer spending) of urban residents decreased from 57.5 percent in 1978 to 37.1 percent in 2002; and that of rural residents dropped from 67.7 percent to 45.6 percent. Today urban residents are shopping at supermarkets as well stocked as any of the best in the Western world and are enjoying dining out at fine restaurants. In rural areas, people are less dependent on grains and are eating more eggs and meat. Affordable, ready-made clothes are available everywhere with people dressing in the latest fashion, both Western and Chinese. In terms of housing, transportation and telecommunications -- people are buying and replacing old household items and appliances with large-screen, high-definition color TV, refrigerators with freezers and other components, and the latest in washing machines, for example. Air conditioners, home entertainment units, water heater and furniture also are popular consumer items; video cameras, computers and exercise equipment are becoming commonplace in the average home. More people are buying cars. In 2003, the purchase of cars in China increased by 34.5 percent. Of every 100 cars sold, at least 60 were purchased by individuals, and that rate is as high as 80 percent in big cities. The consumption expenditure on housing has also kept growing, with its nationwide increasing rate for 2003 reaching 31.9 percent.

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