China's economy will grow on average by six per cent a year for the next two decades, propelling it to become the second-largest in the world by 2030, a report by a leading investment bank said Friday.

China's membership of the World Trade Organisation (WTO) may cause disruption in the short term but ultimately the benefits will outweigh the costs, Lehman Brothers said in a bullish assessment.

The report, entitled "China: Gigantic Possibilities, Present Realities", covers the prospects for Beijing's economic, political, social and foreign policy from a market perspective.

It predicts that whatever the potential setbacks, China will not be deflected from its present policy of opening its economy to the wider world.

"As China will face many issues of adjustment as it moves forward, we remain basically optimistic that China will overcome these obstacles and grow fast in coming years," said the firm's global chief economist, John Llewellyn.

"We have been systematically impressed by the way the Chinese government and the Chinese people have learned from the experience of other countries which have attempted similar transitions," he told a press briefing.

However Lehman Brothers said continued structural reform of the economy was vital for the more optimistic growth targets to be achieved.

"Without (structural) reform, China will grow on average per year over the next 20 years by under four per cent," said senior economist Robert Subbaraman, who coauthored the report.