China must relax its grip on industry and move towards a free-market economy, the World Bank said on Monday in a report that forecast the country would become the world's largest economy before 2030.
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Judging China to be near an inflection point in its economic growth, the World Bank called on Beijing and its incoming leaders to overhaul the structure of the world's No. 2 economy to keep income and productivity rising in years ahead.
"As China's leaders know, the country's current growth model is unsustainable," World Bank President Robert Zoellick said in Beijing at the launch of the "China 2030 Report".
"This is not the time just for muddling through. It's time to get ahead of events and to adapt to major changes in the world and national economies."
An executive summary of the 400-plus page report, made public by Zoellick, had six broad recommendations for Beijing: strengthen a market-based economy, foster innovation, go "green", provide social security for all, improve the fiscal system and seek mutually beneficial relations with the world.
Among other specific recommendations, it urged Beijing to commercialize banks and allow interest rates to be set by the financial market, develop its private sector, protect farmers' rights and cut local governments' dependence on land revenues.
The outcome of these changes would produce a China that is more socially stable and equal in wealth distribution, relies less on exports and investment for economic growth, and more on domestic consumption that can be sustained, the Bank said.
"The reforms that launched China on its current growth trajectory were inspired by Deng Xiaoping who played an important role in building consensus for a fundamental shift in the country's strategy," the report said.
"China has reached another turning point in its development path when a second strategic, and no less fundamental, shift is called for."
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