The Organization for Economic Cooperation and Development on Friday said China should initiate reforms to ensure a fourth decade of rapidly converging living standards and a greener economy.

The Paris-based OECD called for deregulating interest rates, opening markets governed by state enterprises to competition and boosting the supply of new building land in high cost areas. The organization also called for deregulating energy prices.

The OECD forecasts China to grow 8.5 percent this year and 8.9 percent in 2014. These estimates were left unrevised from the projections released in November. The OECD estimate is optimistic compared to the government target of 7.5 percent this year.

According to the OECD, the growth will be underpinned by housing demand, lower interest rates and business investment. Nonetheless, export growth is set to remain subdued.

In case of worse-than-expected developments abroad, the group said the appropriate response from China would be to lower interest rates.

The inflation estimate for 2013 was lifted notably by the OECD to 2.7 percent from 1.5 percent and that for the next year to 2.9 percent from 1.4 percent. In February 2013, inflation rose to a 10-month high of 3.2 percent from 2 percent in January.

RTTNews