China’s Engel coefficient falls to a record low in 2018


The Engel coefficient, a measure of food expenditure as a proportion of total household spending, fell to 28.4 percent last year in China, down 0.9 percentage points from the previous year, according to the National Bureau of Statistics (NBS).

China’s Engel coefficient 40 years ago was 57.5 percent in urban areas and 67.7 percent in the countryside, statistics showed.

The fall of the figure by half in four decades is undoubtedly a huge achievement. Zhang Yansheng, chief research fellow with the China Center for International Economic Exchanges, said it shows that the country’s economic strength has risen significantly and is a result of continuous growth in the past.

Experts said the decline of the Engel coefficient indicates that people earn more than before. In 2018, China’s per capita income increased by 6.5 percent, faster than the growth of GDP per capita of 6.1 percent, according to the NBS.

In 1978, the per capita disposable income was 343 yuan in urban areas and 134 in the countryside. By the end of 2017, the two figures had exceeded 36,396 and 13,432 yuan, respectively. There are forecasts holding that by the end of 2018, the number of China’s middle-income earners had reached 400 million.

Bai Jingming, vice president of the Chinese Academy of Fiscal Sciences, said China has diversified the sources of income, increased workers’ salaries and non-work income, and raised asset-related income of its residents, since reform and opening-up.

The decline of the Engel coefficient reflects consumption upgrades. Ning Jizhe, head of the NBS, said the drop of the figure shows that consumption on non-food items is rising.

He cited the service sector as an example. Last year, service consumption saw a continuous rise. The number of tourists and tourism revenue both increased by more than 10 percent. Consumption of cultural, information, education, health care products and services all grew rapidly.

The fall of the Engel coefficient reflects change in people’s view on consumption. Ning pointed out that an important trend of consumption is that people are buying high-quality products, though the prices may be higher.

A woman surnamed Jiang said before she lived a frugal life and bought almost nothing but food, she now prefers fine products more though they are expensive.

Experts also said that the Engel coefficient could not reflect the overall picture of the country’s economic status, pointing out that the imbalanced economic development between different regions of the country and people’s different consumption habits should also be taken into consideration while evaluating the Engel coefficient.