Abstract: This paper first outlines the basic situation of urban and rural residents' consumption in China, focusing on the consumption level, consumption structure and changing trends of urban and rural residents. Then, by using the AIDS model, it analyzes the consumption structure of urban and rural residents during the period of the Eleventh Five-Year Plan and the Twelfth Five-Year Plan, and calculates their expenditure elasticity and self-price elasticity of the consumption in different periods. The following conclusions are derived: the difference between urban and rural consumption structure is being gradually reduced. The consumption of rural residents has been basically stable, while the development-and enjoyment-oriented consumption of rural residents is insufficient. Furthermore, family equipment and communication facilities will be the key elements to increase the consumption of urban and rural residents. The paper also provides policy recommendations to narrow the gap between urban and rural consumption.