This paper analyzes the overall income and consumption in urban and rural China in 2012, and forecasts the trend of residents' consumption in the future.In 2012, income level continues to increase steadily across both urban and rural residents.Meanwhile, residents' living standard is further improved; the consumption structure is optimized, where quality of life has been enhanced to a new level.However, admittedly, the percentage of residents' income is relatively lower in the overall GDP composition, which in turn becomes an obstacle to boost domestic consumption.Furthermore, the wealth shrinkage directly holds back the increase of consumption.At the same time, soaring housing price also has negative effect on people's consumption level.In addition, the social security system still lags behind in development which sets the limit on the growth of domestic consumption.For 2013, the economic growth rate will remain at about 7.5%, and the income level for both urban and rural residents will keep the trend of steady increase. <<