China could be world's No1 economy by 2016

China could become the world's largest economy by 2016 if it fully implements a series of regulatory, market, socio-economic and tax reforms, the Organization for Economic Cooperation and Development said.

In the presentation on Friday of its latest Economic Survey of China, the OECD forecast that the Asian giant's economy will grow by 8.5% this year and 8.9% in 2014, higher than most analysts' expectations.

The main short-term risks to the world's second-largest economy, according to the OECD, are weak external demand and inflation, which has risen since the start of the year.

Economic policy changes, which the OECD deems essential to guarantee sustained growth, are already been carried out by the new government, the organization's secretary-general, Angel Gurria, said.

The country is becoming less and less dependent on exports and consumption has recently been a bigger driver of growth than investment, he added.

These changes, along with several still-pending pro-market reforms, are the main ingredients required for China to make the leap to developed-country status, analysts say.

The OECD report expressed optimism about the political will of China's new leaders, President Xi Jinping and Prime Minister Li Keqiang, to implement the needed reforms.

China's economy grew at a 7.8% clip in 2012, its slowest pace in more than a decade, mainly due to the economic problems of the European Union and the US, its two largest trading partners.