The sources of China's stunning economic growth over the past 30 years are beginning to lose their punch, highlighting the need for reforms, World Bank President Robert Zoellick said Thursday.

If China is to continue to grow strongly, it can no longer rely simply on soaring exports and investment, Zoellick said, but must rebalance through greater domestic consumption.

"The drivers of China's meteoric rise are waning," Zoellick said in an article published on the World Bank's website and to be printed in the Financial Times on Friday.

"By 2030, if China reaches a per capita income of $16,000 -- a reasonable possibility -- the effect on the world economy would be equivalent to adding 15 of today's South Koreas," he said.

"It is hard to see how that expansion could be accommodated within an export and investment-led growth model."

Without fundamental changes, Zoellick said, China will only exacerbate the problems of the world's economy and its own: greater imbalances, higher food and resource prices, more environmental damage, difficulty supporting an aging population, and over-reliance on foreign markets.

Writing on the eve of a high-level meeting in Beijing by Chinese and foreign experts, Zoellick said Beijing's policymakers are well aware of what they need to do.

"The challenge is 'how' to do it," he wrote.

"A critical question is how China can complete its transition to a market economy. A broad agenda needs to include redefining the role of the government and the rule of law, expanding the private sector, promoting competition, and deepening reforms in the land, labor, and financial markets," Zoellick said.

He called on Beijing to promote green industries, strengthen its fiscal system, and build better and more efficient public services, with the private sector taking part.

Zoellick noted that China's strengths have been crucial in helping the world stabilize in crisis, but that its growth model is unsustainable.

"What happens in China is as important as Europe, Japan, or the United States," he reminded.

China's manufacturing growth rebounds
Beijing (AFP) Sept 1, 2011 - China's manufacturing activity rebounded slightly in August, two separate surveys showed Thursday, but costs rose further as Beijing vowed to keep up efforts to fight inflation.

The HSBC purchasing managers index (PMI) rose to 49.9 in August from 49.3 in the previous month, which was the lowest level in 28 months and the first contraction in a year, according to a statement by the British banking giant.

A reading above 50 indicates the sector is expanding, while a reading below 50 suggests contraction.

The official PMI jumped to 50.9 last month from 50.7 in July, which was the lowest level in more than two years, the China Federation of Logistics and Purchasing (CFLP) said in a statement.

However, the government index for new export orders fell to 48.3 in August from 50.4 in July, indicating overseas shipments may slow, while the HSBC survey showed that new foreign business contracted for a fourth month.

"These data confirm our view that China will only see growth moderation in the coming months, rather than a hard landing," said HSBC economist Qu Hongbin in the statement.

Both surveys showed inflationary pressures -- a major bugbear for policymakers -- increased last month.

The official input prices sub-index rose to 57.2 last month from 56.3 in July, with raw materials and energy costs leading the rise, while HSBC data showed cost inflation rose at its highest rate in three months.

"Generally the new foundations underpinning economic growth still need to be further consolidated," Zhang Liqun, a government analyst, said in the CFLP statement.

Chinese Premier Wen Jiabao said Wednesday that reining in consumer prices remained Beijing's priority despite growing instability in the domestic and global economy, suggesting that the tightening measures would be kept in place.

Beijing has been struggling to tame inflation, which hit a three-year high of 6.5 percent in July, amid fears rising food and housing costs could trigger social unrest in the country of more than 1.3 billion people.

The government has raised interest rates and tightened lending restrictions numerous times this year to stem a flood of credit in the world's second largest economy.

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