Abstract:A model was built to test the effects of new type of urbanization on both rural and urban consumption in China considering the characterristics of the new economic normality, and an empirical research was conducted with the panel data of China’s provinces ranging from 2012 to 2014. It is found that under new economic normality, urbanization rather than urban consumption increases rural consumption. Moreover, the robust tests show that urbanization can improve rural consumption of both the coastal and inland provinces. Furthermore, it can also increase rural consumption of different income provinces. However, it has both positive and negative effects on rural and urban consumptions if adding lags.