China economy
A man casts a net by the side of a river next to a construction site of new residential buildings in Wuhan, Hubei province.Reuters

China's economy has the potential to grow at a pace of 7% to 8% for another two decades, according to former World Bank chief economist, Justin Yifu Lin.

Lin, China's most influential economist who has unparalleled access to China's top economic policymakers including Premier Li Keqiang, expressed his bullish view on the economy during an interview with Business Spectator.

China is presently the world's fastest-growing major economy with annual gross domestic product growth rates averaging 10% for the last 30 years.

However, its economic growth has slowed down recently due to increasing exposure to foreign markets. In 2013, the economy expanded 7.7%, the lowest pace in more than a decade.

It is also projecting a 7.5% growth for 2015 with its ever-growing problem of debt, both government and corporate.

Despite the negatives, Lin believes that "China's boom has not yet run its full course". His view is based on the observations of the development history of four major Asian economies in the last half century and underpinned by the so-called "late developing advantage theory".

"The theory says that late developing countries can grow much faster than developed economies during the catch-up stage of their development by absorbing and importing advanced technology and know-how, but the pace of growth will slow down as the gap between developed and developing countries becomes narrower," Business Spectator writes.

Lin noted that China's per capita income level is only 21% of the US back in 2008, which roughly reflects Japan's position in 1951, Singapore in 1967, Taiwan in 1975 and South Korea in 1977. These countries had all grew between 7.6 and 9.2% for two decades.

If China follows the growth pattern of these four advanced East Asian economies, it has a good chance deliver a yearly growth rate of 8% for another 20 years, given the large gap currently exists between China and the US, according to him.

"China has the potential but it does not necessarily mean it can fully utilise that potential. However, if you don't have that potential, there is no way for you to achieve anything regardless of how hard you may try," Lin told Business Spectator.

"Once we transition from an industrial economy to a post-industrial economic society, our emission and consumption of energy will decline," he said referring to China's growing pollution problem.

Speaking about small and medium sized firms' inability to access finance, he noted that China still has a relatively under-developed capital market to support such companies.

Lin noted that privatisation of state-owned companies is not a necessity for China.

"The most important thing for state-owned enterprise reform is competition and creation of a level playing field," he said.