At a recent meeting, Chinese Premier Li called for less political power in the market economy in order to motivate creativity of market players and achieve transformation of the government.

China has been a workshop to the world. However, the world's largest manufacturer has few private world-class enterprises.

Lieberthal said China has several enterprises with global presence but few world-class enterprises in the real sense.

He did not think providing large state-owned enterprises with subsidiaries and cheap access to capital is the right way to nurture world-class companies, but taking market-oriented measures to vitalize the private sector is.

Lieberthal said he had been to Chengdu many times since the 1970s, and was impressed by the changes that took place in the city. He said one major issue in development of China's western region is how to enable local residents to benefit from the value created.