China's social and economic development has entered a new phase. As its economy undergoes a transition, many social contradictions are emerging, reform is entering its most difficult stage and economic growth is shifting to a lower gear.

The long-established global political and economic balance is being broken, and China faces a constantly changing reality amid an important period of strategic opportunities.

In the past four years, the world has witnessed major changes. The eruption of the global financial crisis in 2008 dragged the world economy down, and most countries are still in the midst of an economic slowdown.

Rising emerging economies are striving for a louder voice in drawing up international rules and handling international affairs. The developed world is attempting to further develop by scaling back the manufacturing industry while expanding domestic demand.

The world's center of economic gravity has been shifting from the Atlantic Ocean region to the Asia-Pacific region. Some organizations even predict that Asia would outstrip North America and Europe in total economic size in the coming decade.

On the other side, China has made remarkable achievements since the implementation of its reform and opening up policy. Under adverse domestic and international circumstances, China has managed to experience steady economic growth in the past years.

The world's largest developing country will enter into a new development phase full of opportunities and challenges.

First, China' economic development will undergo a transitional period. In the past, investments and exports were its growth engines. Economic growth primarily depended on manufacturing and increasing consumption of physical resources. This growth pattern is unsustainable. The country should carry out a transformation from an extensive to intensive development model. Nurturing new economic competitiveness will exert a significant influence on the rise of emerging countries.

Second, an array of social problems have emerged. Based on past experiences of other countries, China risks falling into the middle-income trap. Additionally, China's development could be plagued by a widening gap between the rich and the poor, unemployment and corruption.

The government's credibility and social stability will be undermined if these problems persist. Hence, the focus should be on improving people's livelihood and enhancing governance.

Third, it will be tougher to move ahead with reforms. In the past three decades, deepening reform has been an inexhaustible driving force for sustained social and economic development. Nevertheless, with changes in economic and social structures in recent years, some deep-rooted structural and institutional contradictions keep coming to light.

The government should get rid of institutional weaknesses that may hinder sustained development. Reforms should be deepened in key fields to build a moderately prosperous society in all aspects.

Fourth, China may no longer experience explosive growth.

Some experts preach that China has exhausted its development dividends, and that its economy will stall in the near future. Others argue that the Chinese market still has great potential, which could allow for sustained high-speed growth.

Objectively, China can't maintain double-digit growth with its economic aggregate expanding and development model shifting.

China's economy has entered a period of single-digit growth. During this period, we should stress the efficiency of economic growth and try to keep a growth rate of 7-8 percent to ensure sustained and sound economic development. n

This is an edited excerpt of a speech by Zeng Peiyan, Chairman of the China Center for International Economic Exchanges (CCIEE) and former Vice Premier of the State Council, at the CCIEE's Annual Meeting of China's Economy (2012-13) held in Beijing on January 26