The business consultancy firm McKinsey Global Institute said in a statement on Thursday that China's economy could grow to $5.6 trillion via gross domestic product and $5.1 trillion of new income for households by the year 2030.

The report's lead researcher, Jonathan Woetzel, said in a statement, "In order to grow, they need to open up more of the economy to competition."

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The report said that if China persists with its investment-led growth, it could push the non-performing loan ratio to 15 percent by 2019 as opposed to the 1.7 percent it has now. The research added that China could suffer a lot if this persists.

China's economic growth has been maintained due to high amounts of credit from banks. Global investors have also constantly worried, as Beijing's efforts to fuel the economic activity of the country and hit growth targets could mean increasing debt that could reach unsustainable levels. If this continues, it could harm the banking system.

The economy and labor productivity of China is now growing at its slowest pace in the last 25 years. McKinsey suggested that China should shift sectors from areas such as agriculture to services and consumer goods.

Woetzel added, "There's plenty of room for employment growth, based on meeting the needs of the middle class and providing a higher quality of business service. And that's going to have to offset what's not going to be there, which are the jobs in construction and heavy industry."

China, however, says that efforts to revamp the industrial sector could mean job loss for millions of its citizens.

Other areas McKinsey hopes China will overhaul are corporate restructuring, boosting demand in the economy, raising labor force skills to fill talent gaps and enhance labor mobility, addressing the income inequality, and raising public-sector effectiveness. 

Woetzel said, "They assumed that urbanization would basically take care of the demand side. But now we have growing inequality in cities, and that can offset gains from rural to urban migration."

It is unclear whether China will be following any of McKinsey's suggestions. 

TagsEconomy, business, finance, china, overhaul, McKinsey Global Institute, business consultancy, Research