China has potential to be world's largest economy

China has potential to maintain the current growth momentum for another 20 years or more and regain the throne of world's largest economy in 2030 or earlier.

However, it depends on various factors to bring the potential into play. China is a developing country lying in the process of institutional transformation and certainly will come up against a lot of unprecedented problems that cannot be ignored during the rapid economic growth period.

Firstly, income inequality and expanded gap between urban and rural areas

At the beginning of the Reform and Opening up, the income gap between urban and rural areas as well as that of eastern, central and western China had shrunk a little, but they began to re-expand since 1985.

The Gini Coefficient, which is an index used to measure equality of income with 0 standing for absolute equality while 1 indicating perfect inequality, rose from 0.31 in 1981 to 0.42 in 2005, closing to the level of Latin American countries, according to the World Bank in 2010.

As the old saying goes that "Inequality rather than want is the cause of trouble," too large gap between the rich and the poor will cause mental imbalance plus relatively backward education, medical treatment, health protection and social security system, so it easily leads to conflicts and impact social harmony and stability.

Secondly, inefficient resource utilization and environmental imbalances

China has consumed a large quantity of energy and resources in the process of rapid economic development. Its GDP accounted for only 5.5 percent of the world's total output value in 2006 but consumed 9 percent of oil, 23 percent of alumina, 28 percent of steel, 38 percent of coal and 48 percent of cement.

As the total amount of natural resources is limited, if China continues its current way of resource consumption and growth mode, it will inevitably affect other countries and the future generations.

Moreover, the soaring price of energy and resources also increased the overuse costs, which is contrary to the strategy of scientific outlook on development.

Thirdly, challenges from external imbalances

Since 1994, China has been maintaining the "double surplus" on the current account and capital account. The current account was relatively small before 2005 but it reached 7.6 percent in 2007.

In the 1990s, China's volume of foreign reserves only reached 11 billion U.S. dollars, but now it has amounted to 3 trillion U.S. dollars due to huge trade surplus, making China the country owning largest foreign exchange reserves in the world.

Different with the rising trade surplus of China, the United States is faced with increasing trade deficit. The imbalanced phenomenon had attracted widespread attention before the global financial crisis in 2008.

Fourthly, problem of education

The problem of education is not easily perceived due to its far-reaching impact, but it does not mean unimportant.

The problem of valuing quantity while ignoring quality still exists in China's current educational policy especially in the field of higher education, such as universities and colleges.

This is not conducive to the cultivation of talents and the progress of society from the long run.

Technological innovation is realized by people with ability and it plays a key role in economic development, no matter introduction of technology or independent innovation of technology. However, education is the basis to cultivate talents and persons with ability.