Before 1949 the Chinese economy was characterized by widespread poverty, extreme income inequalities, and endemic insecurity of livelihood. By means of centralized economic planning, the People's Republic was able to redistribute national income so as to provide the entire population with at least the minimal necessities of life (except during the "three bad years" of 1959, 1960, and 1961) and to consistently allocate a relatively high proportion of national income to productive investment. Equally important to the quality of life were the results of mass public-health and sanitation campaigns, which rid the country of most of the conditions that had bred epidemics and lingering disease in the past. The most concrete evidence of improved living standards was that average national life expectancy more than doubled, rising from around thirty-two years in 1949 to sixty-nine years in 1985.

In 1987 the standard of living in China was much lower than in the industrialized countries, but nearly all Chinese people had adequate food, clothing, and housing. In addition, there was a positive trend toward rapid improvements in living conditions in the 1980s as a result of the economic reforms, though improvements in the standard of living beyond the basic level came slowly. Until the end of the 1970s, the fruits of economic growth were largely negated by population increases, which prevented significant advances in the per capita availability of food, clothing, and housing beyond levels achieved in the 1950s . The second major change in the standard of living came about as a result of the rapid expansion of productivity and commerce generated by the reform measures of the 1980s. After thirty years of austerity and marginal sufficiency, Chinese consumers suddenly were able to buy more than enough to eat from a growing variety of food items. Stylish clothing, modern furniture, and a wide array of electrical appliances also became part of the normal expectations of ordinary Chinese families.

Living Standards Improving in China

China's per capita gross domestic production (GDP) is expected to top 800 U.S. dollars by the end of the year, statistics show.

After China's GDP increased by three times in 1995 from 1980, the per capita GDP also jumped three times in 1997, three years earlier than the Ninth Five-Year plan had predicted.

Statistics show the growth rates of urban and rural citizens' annual income was 5.6 percent and 5.4 percent respectively. The urban per capita income hit 5,854 yuan (705.30 US dollars) while farmers' average per capita net income reached 2,210 yuan (243.49 US dollars) last year.

Consumption rose notably with more money spent on housing and people owning more savings deposits, foreign exchange deposits, stocks and other financial assets.

The consumption structure changed remarkably with reduced money on basic daily necessities and increased spending on housing, communication, medical insurance, education and entertainment.

The Engel Index in China's urban areas went down from 49.9 percent in 1995 to 41.9 percent in 1999. While the Index in rural areas decreased from 58.6 percent to 52.6 percent.

The index, representing the ratio of expenditure on food against the whole expenditure reflects the changes of people's consumption patterns. Experts here predict the urban and rural Engel index will continue to drop respectively to 40 percent and 50 percent by the end of the year.

Meanwhile, living conditions and the consumption of durable goods has increased as well. For example, owning a car was still a dream to many families years ago. But not today.

Along with the improvement of the living standard of people in urban areas, their cultural life is also greatly enriched.

Consumption on traveling has been boosted by extended public holidays such as the Labor Day holiday in May and the week long National Day holiday which starts on October 1.