A recent World Bank research report calls for a shift of China's development and growth model, in which strategic reforms are needed to avert a hard-landing among other risks.
"China should complete its transition to a market economy- through enterprise, land, labor, and financial sector reforms—strengthen its private sector, open its markets to greater competition and innovation, and ensure equality of opportunity to help achieve its goal of a new structure for economic growth," World Bank said in a statement on its website ahead of the launch of the report Monday.
The report, titled "China 2030: Building a Modern, Harmonious, and Creative High-Income Society", recommends steps to deal with the risks facing China over the next 20 years, including the risk of a hard landing in the short term, as well as challenges posed by an ageing and shrinking workforce, rising inequality, environmental stresses, and external imbalances.
"The case for reform is compelling because China has now reached a turning point in its development path," said World Bank Group President Robert B. Zoellick, "Managing the transition from a middle income to a high-income country will prove challenging; add to this a global environment that will likely remain uncertain and volatile for the foreseeable future and the need for change assumes even greater importance."
According to the summary of the report, "growing recognition within China that the current pattern of production and growth is unsustainable is giving rise to new approaches toward realigning government priorities."
Meanwhile, the report warned that global and domestic trends are also likely to give rise to many risks that could slow economic growth, citing "a sudden decline in real estate prices and a sharp contraction in construction and investment, or a rapid growth slowdown in the advanced economies leading to sharply lower global trade and growth" as an example.
The so-called middle-income trap is also a likely cause of a growth slowdown, the World Bank said.
Fortunately, "China has an opportunity to avoid the middle-income trap, promote inclusive growth, without further intruding on the environment," Zoellick said.
In approaching this, the World Bank report lays out six strategic directions for China: completing the transition to a market economy; accelerating the pace of open innovation; going "green" to transform environmental stresses into green growth as a driver for development; expanding opportunities and services such as health, education and access to jobs for all people; modernizing and strengthening its domestic fiscal system; and seeking mutually beneficial relations with the world by connecting China's structural reforms to the changing international economy.