Middle class key to consumption

Economists have been talking for years about the need to boost domestic consumption to achieve more balanced and sustainable economic growth.

To be sure, consumer spending, especially in the larger cities, has been increasing rapidly in the past decade or so. But the rate of increase has persistently lagged behind GDP growth. As a result, the proportion of domestic consumption to the overall economy is lower than the ratio in the United States, Japan and many European Union countries.

It has long been noted that the over-reliance on exports to fuel growth exposes the economy to fluctuations in overseas demand and the prices of a wide range of raw and industrial intermediary materials, which are largely controlled by cartels of producers and foreign financial institutions that dominate trading in the commodity markets in the United States and Europe. What's more, the country's focus on exports has generated trade frictions with other countries, particularly the US, which has a large trade deficit with China.