China could grow into a high-income economy before 2030 if it adopts an economic strategy fostering innovation, upgrading, inclusiveness and green growth, according to a report issued on Saturday by the Asian Development Bank and Peking University.

"Tilting the balance of the economy from low-cost to high-value production, from relying on government to relying on markets, from investment to consumption, and from external to domestic demand will allow China to grow beyond its current middle-income status," said Zhuang Juzhong, the report's co-author and ADB deputy chief economist.

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"Under such a scenario, the economy could grow 8 percent annually from 2010 to 2020, and 6 percent annually from 2020 to 2030."

The report, Growing Beyond the Low Cost Advantage: How the People's Republic of China Can Avoid the Middle Income Trap, said that despite its spectacular growth over the past 30 years, China is now at a critical juncture where a new development model is urgently needed to lift the economy to a higher level. With the right strategy, that could still be achieved before 2030.

The ingredients for turning China into a high-income economy include policy steps to encourage more innovation and industrial upgrading. Deepening reforms of enterprises, the labor and land markets, the financial sector, and the fiscal system are key. Increasing support for education, developing high-value services, managing urbanization effectively, and creating conditions for "greener growth", are the other crucial elements of a healthier development model, according to the report.