China must move from low-cost to high-tech value-added manufacturing in order to sustain its rapid economic growth, the head of global investment banking and securities firm Goldman Sachs said Tuesday.

"One thing which is critical to China now is to move the economy from low-cost manufacturing to high-tech value-addition and develop a strong private economy," said Henry Paulson, chairman and CEO of Goldman Sachs.

Developing a strong private economy (capital market) would also take pressure off the country's banks, Paulson said, while speaking at the ongoing Fortune Global Forum here, Xinhua reported.

He called for pacing up development of China's capital market to bring it at par with the advanced countries.

China needed to strengthen domestic security firms to put priority on developing institutional markets rather than retail markets and to have more high quality listings.

He said the size of Japan's equity market was $3.6 trillion while that of Hong Kong was $600 billion. But China's market capitalisation was only $400 billion.

Of the 1,400 companies listed on China's security market, 90 percent were state-owned enterprises, he pointed out. "One of the huge problems in the market is the structural flaw," Paulson said.

In countries like the US, two thirds of the capital came from the capital markets, but in China, this figure was only four percent, Paulson said.

--Indo-Asian News Service