CHINA'S government has come up with some "good" economic prescriptions for its growth problems, former US Treasury Secretary Henry Paulson said in an address to the Fortune Global Forum in Chengdu yesterday.

"The priority of the Chinese government right now is to re-invigorate reforms," Paulson said. "The reforms need to be accelerated to address daunting challenges, such as the high savings rate, excessive reliance on investment and a rapidly aging population.

China's new leadership has been doing well in recognizing the problems, Paulson added, endorsing the shift of emphasis to services from manufacturing.

But more needs to be done to widen economic access, especially in the finance industry, to force state-owned companies to be more competitive and to expand the private sector, a major source of jobs, Paulson said.

"Whether GDP grows 7 percent or 7.5 percent doesn't really matter much," he said.

China's government has lowered this year's growth target to 7.5 percent from 8 percent, indicating more tolerance toward slower growth amid calls for faster economic restructuring.

It is expected to unveil a new round of reforms later this year, involving possible changes in tax-sharing with provincial and local governments, clarification of land ownership transfers and decentralization of administrative controls.

"The difficult part is that the Chinese economy has expanded to such a big size that you need to get the timing and sequence of reforms correct," Paulson said.

"The good news is that people have high expectations toward the reforms," he added. "The bad news is that the challenges ahead are similarly daunting."

The success of China's future reforms affects the United States, Paulson said, and the two economies need to build closer trust.

"Apart from the challenges in China, the world has so many issues waiting to be addressed, such as environmental protection," Paulson said. "If the US and China can work together, the world has a big chance of success."