China is capable of more of the same remarkable economic growth it has seen over the past two decades but it must also enact much needed reforms in the banking, trade and other areas.

Right now, with reforms still in process, "it is too soon to tell whether as yet the so-called soft landing has been successfully engineered," UPI quoted Anne Krueger of the International Monetary Fund as saying.

China's economy exploded after it embraced a market economy about 25 years ago. Real GDP grew on average 9.7 percent per year since 1990. The country's economy is about 9-10 times larger than it was in 1978.

It has been a regional as well as a global powerhouse, important to the Asian economy especially in the light of the economic slowdown experienced by Japan and the European Union.

For instance, South Korea is sending a fifth of its exports to China.

The share of Indian exports to China has nearly quadrupled in about a decade, going from less than one percent in 1995 to 4.5 percent in 2003.

In fact, Japan's recovery has been fed by the ability to export to China, said Randal Quarles, assistant deputy of international affairs at the US Treasury Department. And Southeast Asian countries have been buoyed upward by China's success.

These and other economic advances have helped tens of millions of Chinese escape poverty, but China is still "markedly poorer than many of its neighbours, and dramatically poorer than Hong Kong," said Krueger. "Continued rapid growth rates are essential if poverty rates in China are to be reduced further."

Economists and others have reason to be concerned about future Chinese growth.

While still a developing economy - about half of the country's citizens are still farmers - China's sheer size and rapid growth has already made it a leviathan in terms of how it affects the world economy. "China's growth is influencing commodity patterns ... prices and trade," Krueger said.

For instance, China has become one of the world's biggest importers of South American goods.

In 1995, imports from Brazil to China were 2.6 percent of its imports. In 2004, they had jumped to 6.3 percent. Argentina saw an even bigger increase, leaping from 1.4 percent to 8.4 percent in the same period, Krueger said. It has also become a major importer of soybeans and cotton.

As regards how China should cut its currency free from the US dollar, to which it is now pegged, a controlled float seemed to be the preferred strategy.

Harvard professor Jeffrey Frankel said China's currency might actually be undervalued by about a third, a good reason to gradually drop the peg to the dollar. The US deficit is another concern.

"The experience of other emerging markets suggests that it is better to exit from a peg when times are good and the currency is strong than to wait until times are bad and the currency is under attack," he said, considering that China has more than enough of foreign currency reserves to meet any currency crisis.

But China also needs to enact other reforms. For one, the country must overhaul its banking sector to take care of non-performing loans, Krueger said.

The country also needs to improve corporate governance and transparency to create a better business environment for both domestic and foreign companies by improving the legal environment.

Some steps towards this would be enforcing contracts, improving bankruptcy laws, and improving intellectual piracy protections.

Such an open environment can also help ease protectionist trade sentiments.

According to Randal Quarles, China could improve its productivity by investing more efficiently. By lowering its savings rate somewhat - a rate currently at 40 percent of China's GDP - it could raise consumption by increasing the national income.

It could privatise state-run businesses that would be much more productive if left to market forces.