Time for China to remove distortions in resources allocation

China's per capita income in 2008 was around 21 percent of the U.S. per capita GDP. This is like Japan in 1951, Singapore in 1967 and South Korea in 1977, and these East Asian economies managed to achieve an average annual growth rates between 7.6 percent and 9.2 percent in the 20 years after that.

It is therefore still possible for China to have another 20 years of sustained high growth of around 8 percent per year from 2008, Lin said.

Certainly China has to continue to carry out structural reforms in order to achieve what is theoretically possible, he added.

Lin said the Chinese leadership is trying to push reforms for the market to play a larger role in the allocation of resources.

The senior economist also said that it is important for China to continue having high savings rate and having investment as a key driver of the economy.

All the economies that achieved sustained high growth had had very high savings rates.

Lin said it was not surprising given that both technological innovation and industrial upgrading, the key drivers of growth, require investment.

"Certainly, for investment to contribute to economic growth, it has to be effective ... to make investment in areas which can improve productivity. But that does not mean we don't need to do investment," he said.