China must press ahead with reforms to help sustain strong economic growth that has fuelled foreign pressure on its trade and currency policies, a top government think-tank said in a report published on Monday.

The State Information Centre's report, published in the China Securities Journal, elaborated on the government's 11th five-year plan, which outlines a goal of achieving annual average growth of 7.5 percent between 2006 and 2010.

The target, which was approved along with the overall plan by parliament last week, was not mandatory and merely reflected the need to ensure per-capita GDP in 2010 is double that of 2000.

In the first five years of this decade, China's GDP grew at an average 9.5 percent a year. In that period, energy consumption was excessive and pollution got worse, the think-tank said.

"China's economic development has reached a temporary peak and it will be difficult for it to climb to another peak without carrying out timely adjustments," the think-tank said.

Foreign countries, responding to China's growing economic might, had "demanded that China take more responsibility, creating endless disputes over issues such as the yuan exchange rate, trade and energy development", it said.       

The United States has kept persistent pressure on China to let the yuan rise faster, despite China's landmark move to revalue the yuan by 2.1 percent in July.

Sen. Charles Schumer, a New York Democrat, and Sen. Lindsey Graham, a South Carolina Republican, visit Beijing on Monday to hear first-hand about China's currency policy, before making a final decision on a bill that threatens a 27.5 percent tariff on Chinese exports to the United States.

Trade Friction

The yuan, which gained 0.24 percent last week, has now appreciated 1.07 percent since the July revaluation. It reached 8.024 per dollar on Monday, its highest level since the revaluation.

The high comes ahead of a visit to the United States in April by Chinese President Hu Jintao, during which the U.S. authorities will likely raise their concerns that the yuan is undervalued giving Chinese exports an unfair advantage that costs Americans jobs and fuels a large bilateral trade gap.

The think-tank reinforced a pledge by Chinese leaders to rebalance growth by spurring consumption while reining in investment and called for deeper reforms, despite resistance from some quarters that sought to protect their "vested interests".

"Objectively speaking, reforms have run into difficulties and reforms on medical care and education have created many social problems, promoting some re-thinks and doubts," it said.

"But China must unwaveringly push reforms since the country cannot overcome various pitfalls on its road of economic and social development without reforms and innovation."

A debate over the direction of reform has intensified in recent weeks amid public concerns over a growing wealth gap and growing medical care and schooling costs, with some officials worrying about foreign influence as the economy opens up.

At the end of the annual parliament meeting last week, Premier Wen Jiabao said there would be no "backpedalling" from market reforms that have brought China more than two decades of rapid economic growth.

The focus of the government's economic drive is to raise the livelihoods of 800 million Chinese farmers and other struggling groups.