Monopolies in the power, communication and financial industries can increase the possibility of corruption as well as broaden the income gap, said a consultant to the State Council, who suggested those are areas where economic reforms should be pushed further this year.

State-owned enterprises, which benefit from lower taxes and fees than private enterprises, are able to use the extra money to lobby the government to increase their market share and cause unfair competition, hindering China's industrial upgrading and dragging down economic development, former chief economist of the World Bank Justin Yifu Lin told Phoenix TV.

"Deepened reforms are key to removing market distortions from the planned economic system, especially in terms of financial and price reforms," Lin said.

He pointed out that the existing financial system, formed mainly by giant State-owned banks and the stock market, primarily serves large enterprises that are trapped in overcapacity and outdated technology.

However, future economic development will depend more on small and medium-sized enterprises in the service industry, Lin said.

The State Council consultant believes that China's annual growth will fall between 7 and 7.5 percent this year, supported by relatively high investment growth.

"A fast growth in investment is necessary to ensure a healthy job market and lift residents' incomes to expand consumption," said Lin.

But the resources and policy support needed to upgrade the industrial structure should come from government, he added.

"The required infrastructure construction, and the financial and legal environment should all be improved under the reforms."

Contact the writer at chenjia1@chinadaily.com.cn