HAIKOU - China's rapid urbanization will greatly increase its number of middle-class people to 600 million and support an economic growth between 7 percent and 8 percent annually by 2020, a government think tank chief predicted on Saturday.

Speaking at a reform forum in Haikou, capital of South China's Hainan province, Chi Fulin, executive president of the China Institute for Reform and Development, said, "As urbanization will create huge domestic demand potential, China still has ample room for transition and reform for the coming decade."

According to the think tank, China's urbanization rate reached 51.3 percent in 2011, meaning over half of Chinese were living in cities and towns last year.

As more farmers are leaving their farmland and becoming migrant workers in cities and towns, China is expected to have another 200 million migrant workers living in urban areas, according to a study by the the China Institute for Reform and Development.

The continued urbanization and the increase in middle-class consumers will spur investment demand by at least 40 trillion yuan ($6.3 trillion) over the next 10 years, Chi said.

He predicted domestic consumption will replace investment to become China's major engine driving the economy, with residential consumption in rural and urban areas expected to jump to 30 trillion yuan in 2016 from 16 trillion yuan last year.