China's economy is confronted with internal and external imbalance, Wu Jinglian, a researcher of development research center with the State Council, said.
"If it runs wantonly, it might lead to excessive production capacity, deflation and even financial systematic risk," the noted economist warned.
China's internal imbalance is displayed in over-investment and consumption deficiency. The proportion of investment in GDP has increased to 45 percent today from 30 percent at early stage of reform and opening up, reported Xinhua.
According to Wu, the dual surplus of foreign trade and international payment showed external imbalance, as well as mounting foreign exchange reserve.
Limited room for monetary policy, excessive liquidity and soaring assets price are reflections of the imbalance of internal and external economy.
Wu said that although the international economic crisis has not exerted severe impact on China's economy, it has led to burst of bubbles in China's financial system, which has triggered shortfall of enterprises' liquidity.
In addition, China's external demand has slowed down due to the international financial crisis, and China's export has suffered greatly.
To respond to the international financial crisis, China has adopted a series of necessary measures to stabilize economy in time. However, these measures are mainly short-term ones, other problems will be incurred if these measures are improperly implemented.
Therefore, Wu called on the government to work out a package of long-term policies, such as how to help tangible economy out of the current plight, small and medium-sized enterprises in particular.
According to Wu, the fundamental link is to change the way of economic growth, and further reform is the key to the change.