China's GDP (gross domestic product) could add $5.6 trillion more by 2030, and its household income could rise by $5.1 trillion if the country successfully becomes a productivity-led economy instead of the current model of using investment to spur growth, according to a McKinsey & Co study.

The new productivity-led model would enable China to create more sustainable jobs, reinforcing the rise of the consuming middle class and accelerating progress toward being a full-fledged advanced economy, the report said.

Currently, China's economy is in a transition. To avoid an economic hard landing, China should switch to a new growth model, the consulting company said .

China needs a series of measures to release its economy's potential, including opening up more sectors to competition, thoroughly overhauling the "zombie companies" that are economically unviable businesses and developing its capital markets, the study said.