purchases of different t)'pes of fibre products and household income levels in 1990
(Fisures 3.3a and 3.3b). In particular, per capita purchases of wool fabric and clothing
rose relatively faster than their cotton and chemical fibre counterparts as per capita
Figure 3.3a Annual Per Capita Fabric Purchases of Urban Households by Fibre Type and Household Income Level, 1990
Annual per capita purchases (metres)
10.00, i.oa- O.IO » Cotton • Chemical Fibres 4 Wool
Lowest Low Low-middle Middle Middle-high High Highest
Income level
Figure 3.3b Annual Per Capita Clothing Purchases of Urban Households by Fibre Type and Household Income Level, 1990
Annual per capita purchases (no. of itans)
10.00 1.00 0.10 0.01 © Hr- o Hr- • Conon 0 Chemical Hbres • Wool
Lowest Low Low-middle Middle Middle-high High Highest IncOTiie level
Note: Annual per capita purchases are measured on a logarithm scale: chemical fibre fabrics include cotton-chemical fibre blends.
income increased. A plot of household sun ey data for earlier years reveals basically the same pattem.
More detailed information on urban income groupings obtained from Statistical Yearbook of China allows us to identify the above relationship statistically. Table 3.1 shows the income elasticity for different t}'pes of fibre products based on a simple double log specification. It is clear from the estimation results that the income elasticity of demand for wool fabrics and clothing is highest among the three fibre products. In terms of elasticit)' ranking, this finding is consistent with BjTon's (1992) results, although the income elasticit}' of demand for wool fabrics has become smaller than one. Another interesting feature of Table 3.1 is that the income elasticit}' of demand for clothing by fibre t}'pe is higher than that for fabrics. This may well reflect changes in consumer beha\ iour as income increases. During 1978-89 the share of fibres sold on the domestic market in the form of finished clothing rose from 10 per cent to around 45 per cent (Shen 1990, p. 159). Fewer people were making their own clothes, probably because of a greater emphasis by consumers on lifestyle and fashion.
Table 3.1 Income Elasticities of Demand for Fibre Products in China. 1990
Commodity Income elasticity t ratio R'
Conon fabrics 0.21 1.82 0.1203
Wool fabrics 0.86 4.85 0.5699
Chemical fibre fabrics (mcluding blends) 0.46 321 0.3633
Cotton clothing 0.92 9.45 0.8387
Wool clothing 1.24 10.80 0.8718
Chemical fibre clothing 0.82 8.59 0.8108
Noie\ The independent variable is household income level. Total ninnber of obsen-ations is 18. As both dependent and independent variable are in log fonn. the coefficients can be interpreted in elasticirs' terms.
Evidence from time-series survey data
Time-series household survey data are available for both urban and rural China. Urban consumer demand for fabrics and clothing shows a quite different pattern from the cross-
sectional case (Figures 3.4a and 3.4b). It is also interesting to note that there are wide variations in purchases of the three types of fabrics and clothing, even though income seems to have increased steadily during the period under study, 1981-91. This suggests that there could be other variables — such as price and demographic factors — influencing the demand pattern. Even so, lack of data forces us to exclude these variables from the regression analysis reported below.
Table 3.2 presents the income elasticities for a number of fibre products in 1981- 91 based on time-series household survey data. In the textile market, the income elasticities for cotton and wool fabrics are not statistically different from zero. The relationship between household purchases of chemical fibre fabrics and income has become negative. In the clothing market, chemical fibre clothing has the highest income elasticity, followed by wool clothing. The income elasticity for cotton clothing, however, turns out to be negative. These results are in sharp contrast with those obtained above using cross-sectional data and also with those of Byron (1992).
China's rural areas constitute a large market for textiles and clothing. Although annual per capita household expenditure on textiles and clothing in rural areas is only one-quarter that of urban areas,'^ because of the larger rural population,^ the absolute size of the rural market is still greater than that of the urban market. In 1991, the rural market was estimated to account for about 58 per cent of the total textile and clothing market in China.
China's rural household sun'ey data include information on only a few textile products, namely cotton, wool and chemical fibre fabrics, and wool yams. Figure 3.5 shows that there is a negative relationship between cotton fabric consumption and income, with an income elasticity estimate of -1.33 (see also Table 3.3).
Whereas in 1991 per capita household expenditure on clothing in urban China was 199.6 RMB yuan, it was only 51 RMB yuan in rural China {Statistical Yearbook of China, p. 284 and p. 311).
Figure 3.4a Annual Per Capita Fabric Pui-chases of Urban Households by Fibre Type and Household Income Level, 1981-91
Annual p e r capita purchases (metres) 10
0.1 100
ga ®
* Cotton fabrics ® Chemical fibre fabrics ^ Wool fabrics
1000
Annual p e r capita household income (RMB Yuan)
10000
Figure 3.4b Annual Per Capita Clothing Purchases of Urban Households by Fibre Type and Household Income Level, 1981-91
Annual per capita purchases (no. of items)
10
0.1
• Cotton clothing ° Man-made fibre clothing
' W o o l clothina
100 1000
Annual per capita household income (RMB Yuan)
10000
Noie\ .Annual per capita purchases are measured on a logarithm scale; chemical fibre fabrics include cotton-chemical fibre blends.
Source: Siaiisiical Yearbook of China 1982-92.