Get ready for surprise on China's reform package

China's upbeat economic rebound in the third quarter has cheered global markets, but the investment-driven growth creates jitters as well as joy, as a looming reversal to the old growth model clouds long-term prospects.

Of the 7.8 percent gross domestic product (GDP) growth, investment contributed a lion's share -- 4.3 percentage points. This outstripped consumption by 0.8 percentage points. Urban residential income grew sharply but at a slower rate, squeezing consumer spending.

When China is striving to steer its economy with a slower, more sustainable growth model based on domestic consumption instead of investment and exports, the third quarter data may indicate nothing more than short-lived prosperity.

Positive economic data in the past few years, notably after the outbreak of the global financial crisis, was propelled by government spending, bank loans and exports, making the sustainable growth pattern still an illusion. It also makes the Communist Party's goal to develop China into a well-off society by 2020 all the more daunting.

The faltering economy, intertwined with a widening wealth gap, rampant corruption and rising social conflicts, put the world's most populous nation and the second largest economy at a crossroads.

The Chinese leadership is aware of this.

President Xi Jinping said, "The country must be bold enough to endure any pain, face up to any danger, and take on any intractable problem that it meets along the path of reform."

The upcoming third plenum of the 18th Central Committee of the Communist Party of China (CPC) is expected to be a watershed as drastic economic policies will be unveiled.

After more than three decades of breakneck growth, China has accumulated wealth and also vested interest groups in which monopolized state firms and local governments are included.

Acknowledging that these groups could hamper healthy growth and weaken the Party's ruling legitimacy, the leadership has introduced pragmatic and concrete measures to cut red tape, extravagance and corruption on an unprecedented scale.

There are compelling reasons to believe that more sweeping and system-wide reform will be announced at the plenum which is scheduled to open next Saturday.

To cut government power and give the market a bigger say in allocating resources will be the focus of the reform package. Major reform issues are expected in the hukou household system, fiscal revenue reallocation, energy product pricing, land ownership and financial liberalization.

Piecemeal measures have been introduced on these issues in parts of the country, but never systematic ones, which means fundamental changes could not take place.

There are also compelling reasons to believe the CPC retains the reform prowess. In the past three decades, China had previously had strong leaderships that were bold and decisive in pushing ahead with aggressive reforms. The current leadership is no less strong-willed.

The public has high expectations for change. Reform has become a growing consensus that has never mustered so much applause and cheering as it has today.

Realistically, China no longer has the luxury to delay much-needed reform. If the CPC wants to retain its power and win the hearts of the people, it is time to do something significant.