China needs to reduce the dominant role of state companies in its economy and promote free markets to keep growth steady and avoid potential crises, the World Bank and Chinese researchers said Monday, Feb 27.

According to AP, the recommendations, in a report on China's development through to 2030, come amid a debate in the ruling inner circle over the future course of economic reform as a new generation of leaders prepares to take office this year.

The emphasis on curbing state industry clashes with Beijing's strategy over the past decade of building government-owned champions in fields from banking to technology and is likely to provoke opposition.

"As China's leaders know, the country's current economic growth model is unsustainable," said World Bank president Robert Zoellick at a conference about the report. He said China has reached a "turning point" and needs to "redefine the role of the state."

The full report was due to be released later Monday.

Its recommendations highlight the fact that after three decades of reforms that allowed Chinese entrepreneurs to become world leaders in export-driven manufacturing, state companies still control domestic industries from steel to airlines to oil to telecommunications.