Former Chief Economist and Senior Vice President of the World Bank Justin Yifu Lin maintains that an effective market in combination with a capable government is essential for rapid economic growth. Lin added that developing countries should indeed base their growth on a market economy.

Lin made the remarks in the wake of the Third Plenary Session of the 18 CPC Central Committee which concluded on Nov. 12 with the launch of the Decision on Major Issues Concerning Comprehensively Deepening Reforms (the Decision) three days later.

In the Decision, China's central authorities clarify that "economic structural reform is an important part in comprehensively deepening reform, with a key issue being the proper management of the relationship between government and market so as to ensure the market plays a decisive role in resource allocation."

It is the first time that the market's role has been raised to the prominent level of "decisive," said Lin, who currently holds the positions of counselor to the State Council and honorary dean of National School of Development at Peking University.

According to him, the market playing a decisive role in allocating resources will accelerate fair competition, remove barriers and eventually lead to a higher efficiency and fairness within the market.

Yet Lin did admit that China, like other countries going through an economic transformation, still holds a batch of businesses that needs governmental support to survive. A clear cut in these businesses will result in massive unemployment numbers.

In light of this fact, Li urged the government to properly step up regulations and solve such problems "in a top-down design," meaning that the government should safeguard the economy's transformation into a more market-oriented one.

China's rapid growth over the past years has fostered an unwanted widening wealth gap which also breeds corruption. Lin added the government did save a number of incompetent businesses from going bankrupt by means of providing subsidies, in a bid to ensure social stability.

"Those were timely and appropriate rescues undertaken for the greater good. But such measures should stand aside now," said Lin, who expects the Decision will solve such issues passed down from the country's reform and opening up.

Lin believes China can still maintain an 8 percent growth for another 20 years during which, in 2020, China will find itself among the countries of high income.