“Though internal demand is important, it cannot replace the external, which means [we need] not only an expansion in total demand but, more importantly, to provide new [market] standards.”

China’s market still does not fully operate in line with international standards in various areas, and must further deepen its integration with the global market, Wu told the forum.

“Many people underestimate the importance of external markets as they fail to recognise that opening up is crucial to China’s future; in fact, opening up is China’s greatest reform.”

The Chinese economy posted 5 per cent growth in the first six months this year, effectively driven by exports.

But some analysts have called on Beijing to rely more on the domestic market due to increasing trade friction with the West over its cheaper electric vehicles and alleged state-backed overcapacity.

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China posts 4.7% second-quarter growth, lower than expected

China posts 4.7% second-quarter growth, lower than expected

“The true problem with China’s economy is the low confidence and expectations of residents,” Wu told the forum hosted by the University of Hong Kong, titled “China’s Power and New Chapter of Global Economy: Development and Outlook”.

China’s imperfect legal system is the most significant factor hindering this confidence, he added.

Wu also criticised Chinese banks for asking residents about the source and direction of their funds when depositing or withdrawing money, calling it a “serious violation of people’s right to privacy”.

His comments, reported by Chinese media, went viral in China, where many are dissatisfied with what they see as the banks’ excessive intrusion into private details.

Wu also took aim at China’s three years of zero-Covid restrictions, saying they had “undermined the rule of law system”.

“I believe that it is the existence of a sound rule of law, combined with an institutional platform shaped under the principles of a modern market economy, that will be the source of China’s continued economic prosperity, rather than frequent policy adjustments,” he said.