Expanding domestic consumption is important for the stable economic growth the country needs when the world economy shows no sign of recovery. However, consumers seem to lack the confidence to spend.

A survey of depositors published by the central bank on Tuesday shows that the index of residents' confidence in future income was 53.2 percent from April to June, 1.7 percentage points lower than the previous three months, and the lowest level since the survey was first conducted in 1999.

At the same time, data released by the National Statistics Bureau showed that the total retail sales were 1,671.5 billion yuan ($262.4 billion) in May, an increase of 13.8 percent over the same period last year, but the lowest in the past 12 months.

Residents' optimism will have to be boosted so that domestic consumption can drive the country's much-needed economic growth.

The confidence to consume is based on a steady increase in income, which should at least keep pace with the consumer price index and GDP. Maybe further tax cuts are needed to increase the willingness of residents to spend.

Yet what is even more important is raising the income of those low-income residents so that their potential for consumption will be further tapped.

For example, the average income of employees in private enterprises was 24,556 yuan ($3,860) in 2011, while the average income of their counterparts in State-owned enterprises was nearly twice as much at 42,452 yuan.

Obviously, such a gap needs to be narrowed by allowing private enterprises to enter the sectors that are monopolized by State-owned enterprises. This will not just narrow the income gap but also increase the competitiveness of State-owned enterprises and inject vitality into the overall economy. In fact, some policies are in the pipeline this year to encourage competition between private firms and their State-owned counterparts.

Hopefully, these policies will help produce a virtuous cycle of economic growth and thereafter reasonably increase the income of residents and so boost their confidence to consume.