Many people presume that China is now among the world's economic giants, and figures can be cited to support that notion. With its gross domestic product (GDP) climbing to $2.2 trillion by the end of 2005, China has become the fourth largest economy, right after the United States, Japan and Germany.

Both the country's foreign trade and absorption of overseas capital ranked third in 2005, standing at $1.4 trillion and $63.8 billion respectively. Over the years, China has built up more than $1 trillion in foreign reserves, the largest ever recorded by a single country.

Notwithstanding these facts, however, those who consider China a major consuming country must be in the minority. The dissenters have ample proofs for their own judgment. One is the decreasing proportion of ultimate consumption relative to China's GDP, which slid from 61.8 percent in 1991 to 52.1 percent in 2005. Another is the decreasing rate of household consumption, down from 48.8 percent of GDP to 38.2 percent during the same period.

A third reason is the progressive slowdown of consumption against the incremental increases in GDP and public spending. From a global perspective, China is also left behind in terms of consumption capacity. According to a World Bank report, while the world average consumption rate was 78 percent in 2005, China's figure stood at barely 50 percent, even below those of some low-income developing nations.

A number of reasons have been given by scholars and officials to explain the root cause of this downward tendency, ranging from the stagnant growth in income for urban and rural residents and the widening disparity between the rich and the poor to a lack of consumer confidence and an inadequate social security system.

Broad masses of consumers have grown more concerned about the decreasing employment opportunities and the escalating costs of housing, education and healthcare ( the last item now accounts for a full 7 percent of the average household income, according to a National Statistics Bureau study, twice as much as that of some developed countries). Meanwhile, the traditional mentality is also blamed for the consumption inertia, as numerous local consumers are either used to leading a comparatively frugal life or still in favor of spending their savings instead of venturing into excessive consumption.

Anyone with a smattering of basic economic knowledge understands that foreign trade, investment and consumption are the fundamental driving forces for economic growth. While China has remained one of the fastest-growing global economies over the past decades, this growth has relied largely on the country's spectacular foreign trade performance and vigorous investment in the domestic market.

This has left some people pondering the vitality of the Chinese economy in the days ahead, as depressed demand for local consumption will in no way help to boost domestic production and will likely make China's long-term target of sustainable economic development a mission impossible.

Amid this harsh reality, the authorities have set stimulating domestic consumption as one of their priorities for the new year, which is taken as good news both within the country and beyond, since a greater consumption capacity not only will lead to a more healthy and sustainable economy in China but also benefit the world at large.