The mainland's investment-driven growth could put the country at great risk of an economic correction, Standard & Poor's Ratings Services warned, joining other analysts in calling for a timely shift in the country's growth model.
"China has the highest investment-to-GDP ratio in the world - a downturn in its investment cycle would not only adversely affect its economy but also those of others, and global commodities prices," S&P said in a report yesterday.
It underlined the vulnerability of China's growth, and sounded a warning to the rest of the world, whose pace of recovery depends largely on demand from China.
S&P compared the share of investment in the gross domestic product of 32 economies that collectively make up about 85 per cent of global GDP.
"What we found is that China has the highest risk of an economic correction, because of low investment productivity over recent years," S&P credit analyst Terry Chan said.
Commodity-exporting countries like Australia, Brazil, Canada, India, Indonesia and South Africa, along with France and Vietnam, had an "intermediate downside risk", he said.
The rating agency warned that overinvestment appeared to precede economic crisis in a country, as seen in the 1997-1998 Asian financial crisis and the 2008-2009 global financial crisis.
As early as 2007, Premier Wen Jiabao vowed to correct what he called "unbalanced, unsustainable, and unco-ordinated" economic growth.
But imbalances intensified after Beijing introduced a massive stimulus package supported with a lending binge in late 2008 to spur investment during the global crisis.
Last year, mainland economic growth cooled to 7.8 per cent, the slowest since 1999, from an average 10 per cent in the past decade. Investment still contributed about half of growth.
Veteran China-watcher Stephen Roach urged Beijing to accelerate the transition to a more consumer-led economy.
"China's growth model has been stretched as never before," said Roach, a member of the faculty at Yale University and former chairman of Morgan Stanley Asia.
"Failure to act quickly on this programme would leave China far too vulnerable to the inevitable next shock in a crisis-battered world."