Singh, director of the International Monetary Fund's Asia and Pacific Department, said in an article published on Thursday's Straits Times, Singapore's leading English newspaper, that whether last year's domestic demand growth in China can be sustained this year is critical for China's continued development.

Singh said that one key idea to catalyze household consumption in China was to lighten the tax burden on labor.  "Taking into account the personal-income tax and various social contributions, taxation of labor income in China is too high," he said, "China could usefully explore shifting part of the burden from labor toward property, capital gains, and inheritance taxes."

He said China has made important improvements in social-reform program, but noted that "more can be done to speed up the existing reform package, find ways to develop full coverage for catastrophic health events, and develop government-backed financing of tertiary education."

"If consumption can be successfully and sustainably boosted, I believe that China's development will enter a new era, one in which economic growth continues at a rapid pace, generates higher employment, increases social welfare, places less demand on natural resources, and, ultimately, is of a much higher quality thereby underpinning more balanced global growth," he said.