It is likely to be tough, but China's new leadership needs to do less and not more if it wants to achieve its goal of delivering an economy driven by consumption rather than investment and exports, China watchers told CNBC.
The challenge for the new leaders — who will rule China for the next 10 years once they officially take over at the end of the parliament session — is to allow the economic shift to take place and resist the temptation to intervene and support growth via state spending.
"Part of what I would look for in a successful rebalancing of the economy is actually not doing anything and letting the adjustment happen," said Lombard Street Economist Freya Beamish.
And China, which has been growing at an average rate of 10 percent a year for the past three decades, has begun to show signs of that shift.
Latest data suggest consumption is playing a greater role in economic activity. It was the largest overall contributor to economic growth in 2012, accounting for 51.8 percent, while investment contributed 50.4 percent.
Still, consumption makes up only about 37 percent of China's gross domestic product, small compared with developed economies such as the U.S., where consumption makes up about 70 percent of gross domestic product (GDP). It's also below levels seen among Asian peers such as India,where consumption accounts for roughly 60 percent of GDP.
Outgoing Chinese Premier Wen Jiabao last week set out a reform plan with a focus on urbanization to boost consumption. China intends to spend $6.4 trillion to bring 400 million people into the cities over the next decade in a bid to turn China into a developed economy where growth is generated by an affluent consumer class.
Other measures such as a recent tightening of curbs on the housing sector are expected to help keep house prices affordable and boost domestic consumption.
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"There has been a mantra about increasing consumer spending and the consumer contribution to GDP for years but that's mostly been words," said Luca Sillipo, chief economist for Asia-Pacific at Natixis Global Asset Management. "We have seen some positive action such as the property measures. … If you can provide affordable housing and curb prices for young Chinese, they will consume and this is what they need to do, but recent steps are still just a drop in the ocean."Spending Power
Three decades of strong economic growth and rising incomes have helped lift spending by Chinese households, the signs of which are not hard to find. China overtook the U.S. as the world's largest auto market in 2009, while market research institute GfK says the demand for LCD TVs in China has tripled from 12 million units in 2008 to 36 million units in 2011.
Retailers from the likes of Wal-Mart Stores to fashion houses such as Prada and Hermes, meanwhile, have expanded rapidly in China on the consumption story.
"We still see lines outside Prada stores in both Hong Kong and China," said Jackson Wong, vice president at Tanrich Securities. "It's a good brand name and one which the growing middle class would love to buy."
China's urban residents saw their average per capita disposable income rise 9.6 percent in 2012, official data show. That growth was 1.2 percentage points higher than in 2011.
Economists said the consumption model is one that not only suits China's economic structure, but is in fact the way the economy is moving naturally.
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Retail sales growth, another indicator of consumption, crept steadily higher in the second half of last year, dipping only slightly at the start of 2013. Retail sales, rose 12.3 percent in January and February year-on-year, compared with 15.2 percent in December.
The path to a consumption-led economy, however, is not an easy one.