Green cars have yet to take off with ordinary consumers, though, despite consumer subsidies that Beijing started offering last year in some cities.

Politicians should indeed encourage investment in clean technologies, but direct subsidies are not the way to do it.

Offer incentives to buy now rather than later; for example, temporary subsidies to consumers who turn in a clunker and buy a new car, a measure adopted in France.

But even there an array of reforms, from a stronger currency to an overhaul of subsidies, is needed to boost labour income and encourage consumption.

Some say step pricing can be used to protect a basic water allowance for drinking, cooking and washing - either for very low prices or for free, as it is in South Africa.