China is on course to become the world’s largest economy “around 2016”, a survey by the Organisation for Economic Cooperation and Development (OECD) has forecast.

“From a long-range perspective, China has now overtaken the Euro area and is on course to become the world’s largest economy around 2016, after allowing for price differences,” the Paris-based group said in its survey of China.

Living standards will continue to improve fast, provided reforms are implemented, most of which feature in the 12th Five-Year Plan (2011-15), state-run Xinhua news agency quoted the survey report.

With $8.3 trillion, China is the second largest economy. It stands next only to United States which has $15.7 trillion strong economy.

The OECD report predicted China to grow at 8.5 per cent this year from last year’s 7.5 per cent saying that the economy is set to regain momentum.

“The gradual pick-up in activity provides a strong background for the ambitious reforms China needs to put in place to continue on the road to prosperity,” OECD Secretary-General Angel Gurria said.

China was well placed to enjoy a fourth decade of rapid catch-up and improving living standards, notwithstanding various risks, the OECD said.

The new economic survey of China examines three closely interlinked sets of issues: urbanisation, relations between central and local governments and the environment.

To sustain vigorous and socially inclusive growth over the longer run, “renewed reform momentum is required with respect to financial sector liberalisation, open competition in markets for goods and services, education, research and innovation, all are as highlighted in the 12th Five-Year Plan (2011-15),” the OECD said.

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