Encouraging consumption

It is hard for policymakers to decide which is the best option to stimulate the slowing economy. The quicker solution is to boost investment, while the more sustainable one is to boost consumption.

The latest official statistics show that the country's retail sales grew 13.7 percent year-on-year in June. In recent months, the figure had been fluctuating around 14 percent, well below last year's level of more than 17 percent.

Although real growth in the disposable incomes of urban residents, who have greater purchasing power than their rural counterparts, was 8.4 percent in 2011, higher than the 7.8 percent in the previous year, it was not enough to increase consumption.