The Impact of Fiscal Policy on Households’ Expectation: Evidence from China’s Total Retail Sales of Consumer Goods

Abstract

This study is based on the growing economic pressure to the downside that China experienced since COVID-19. This epidemic has weakened the country's financial capacity and lowered households’ consumption expectations. The paper explores the health spending, general government spending, VAT revenue, and total retail sales of consumer products. The core task of this study is to examine how fiscal policy affects consumption. The National Bureau of Statistics and the Ministry of Finance's data for the years 2020 to 2023 are chosen using the quantitative study methodology. According to the research results, it is concluded that increasing some special types of fiscal expenditure will play an important role in encouraging people to consume during the pandemic. Based on the aforementioned findings, it is helpful to suggest the following solutions and countermeasures. Governments should increase social security spending to ensure the basic needs of low-income groups are met, while also increasing medical spending to improve people's health and increase their willingness to consume.