Information and communication technology and its implication on household consumption in China

In recent years, China has witnessed significant advancements in the field of information and communication technology (ICT). The evolution of ICT not only shapes consumption patterns but also profoundly alters consumer behavior. Understanding how to harness the consumption potential of ICT to boost consumption is crucial for the continued growth of the Chinese economy. This study makes three distinct contributions. Firstly, it constructs a measurement system for China’s ICT development level that encompasses three dimensions: ICT basic resources, ICT popularization, and the ICT development environment. Using panel data from 2004 to 2019 at the provincial level, it measures and compares the ICT development levels of various provinces (regions and cities) in China. Utilizing data normalization and the entropy method, the results indicate that China’s ICT basic resources have developed rapidly, and ICT user penetration rates have continued to increase. Secondly, this study employs a dynamic panel model incorporating additional ICT-related factors to explore ICT’s influence on provincial consumption levels. The empirical findings, derived from dynamic System Generalized Method of Moments (GMM) and quantile regression, demonstrate that ICT positively influences household consumption levels. Furthermore, the robustness test results using robust standard errors align with the dynamic panel system GMM estimation results. Thirdly, this thesis evaluates the impact of ICT on household consumption structure using data from the China Family Panel Studies (CFPS). As CFPS data collection occurs biennially and requires ICT-related usage data, the primary samples come from the CFPS data spanning 2014, 2016, 2018. Employing the fixed-effects models and instrumental variable regression, empirical findings indicate a statistically significant positive correlation between ICT and household consumption structure. Moreover, consistency exists among propensity score matching, the construction of balanced panel data, and robustness tests substituting core explanatory variables, corroborating the fixed-effects model results. In summary, the research results suggest that China could use the established ICT measurement system to narrow the differences in ICT development between regions and at the same time vigorously enhance its ICT development level to promote an increase in household consumption levels and an upgrade in household consumption structures. This study provides support for the relationship between ICT and household consumption levels and structures and offers a scientific basis for decision-makers in making relevant decisions regarding ICT and consumer economic development.

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