China's efforts to reshape its business model by focusing more on domestic growth and boosting consumption are seen as "critically important" steps in the "right direction" to help promote global economic growth, said International Monetary Fund chief Christine Lagarde on Thursday.

"The role of China going forward is in our view critically important, if you look at the size of the economy, if you look at the pace at which it grows," said Lagarde at a news conference before the opening of the Spring Meetings of the World Bank Group and IMF in Washington.

A delegation from China including Minister of Finance Lou Jiwei, Governor of the People's Bank of China Zhou Xiaochuan, and Vice-minister of Finance Zhu Guangyao, will attend meetings of the G20 nations' finance ministers and central bank governors at the Spring Meetings between April 19 and 21.

Legarde cited China's "ability to gradually reshape its business model by focusing gradually more on the domestic market, in order not to be overly reliant on exports, moving from quantity growth to quality growth, being more attentive to the return on investment, and being willing to expand the consumption in the territory. and to start negotiating on wages," the former French lawyer added.

"All of this is really heading in the right direction of an economy that assumes leadership as well as responsibility," she said.

Lagarde also emphasized that developed and emerging economies including the United States, Europe, Japan and China need to shape their current economic policies to promote global economic growth.

"We need growth, first and foremost," Lagarde said.

On the global economy, Lagarde said that a priority for Europe was to fix its "frayed banking system" and for the US to pursue "better quality" deficit reductions.

Experts believe China, among other strong global economies - both developed and emerging ones - has potential for expansion, in particular with domestic growth.

"China still has a lot of growth potential to go," said Chen Zhiwei, a professor of finance at Yale University.

Citing the service sector as one industry that lags, Chen said "the future growth potential is dependent on China conducting the needed institutional reforms, such as the household registration system reforms (so that people are free to move between urban and rural areas) and the land ownership reforms".

"If these fundamental reforms are done properly, China can grow for another ten years or longer," said the professor.

Mark DeWeaver, co-founder of Quantrarian Asia Hedge, an emerging markets fund, said China needs to implement major reforms to redistribute income from the state to households with the goal of stimulating domestic consumer demand.

"Two obvious ways to do this would be to increase state-owned enterprise dividends and to liberalize deposit rates at banks," said DeWeaver.

Economists, including the former World Bank chief economist Justin Yifu Lin, predicted that the growth of the world's second largest economy will be around 8 percent this year.

"But as a developing country and a transitional economy, China certainly faces many challenges to tap into this potential," Lin said at an economic forum in New York earlier this year.

yuweizhang@chinadailyusa.com