Innovation will help China develop a knowledge economy as the country enters its next stage of reform and openingup, Oxford University scholar Fu Xiaolan said.

Such an economy is essential for China's sustainable long-term growth and increasing contribution to global development, said Fu, who is director of the university's Technology and Management Centre for Development.

"As Chinese companies grow their innovation and technological capability, China can also play a greater role helping other developing countries achieve innovationdriven and environmentally friendly growth," she said.

"This is especially so when the US is withdrawing from global governance, and China is moving toward the frontier of global leadership."

Fu's words came as China celebrates 40 years of reform and opening-up, a policy that transformed the country from a planned economy into a market-driven one. That unleashed the entrepreneurial spirit in the Chinese people, whose can-do attitude created tremendous economic output.

During the past 40 years, China's GDP has grown by an annual average of 9.5 percent, and the country has lifted more than 800 million people out of poverty.

But rather than citing figures, Fu, the author of several pioneering books including China's Path to Innovation, has a personal story about reform and opening-up.

"It changed my life," she said, explaining that China's reform reintroduced the university system, allowing her to receive a good education, which led to her going to the United Kingdom in 1999 to study for a doctorate at the University of Lancaster.

As a Chinese student and scholar in the UK, Fu watched how her country transformed in the eyes of the British people. Back in 1999, they thought China was "a large country, a developing country, poor but doing well".

In the early 2000s, British people paid more attention to China as a big market. In fact, UK Trade and Investment, a former government agency, led a project between 2003 and 2005 to help British companies do business in China, which Fu participated in.

But the real change came in 2008, when the global financial crisis sent shock waves through major Western economies, but China's economy was less affected.

"The whole world started to look to the East, to look at Chi-na," Fu said. "People started talking about China's role in global economic recovery."

Since then, China has become an essential part of global discussions, not just on business but on a huge array of multinational issues including globalization, climate change and global governance.

With China's rise, Chinese companies have also pioneered innovation, improving people's access to information and resources.

Chinese seniors can receive medical advice efficiently and cheaply through mobile health technology, while rural communities, whose education resources are limited, can watch videos on a wide range of topics via mobile apps.

Fu said the Chinese government has been wise to make innovation a policy focus since 2006. The journey toward further innovation will be tough, though, she added, as it faces pressure from the domestic economy and the international environment.

Domestically, making the transition from a manufacturing- and export-driven growth model to a new, innovationdriven consumption economy means significant changes. The Chinese economy's structural shift will alter the dynamics of its interaction with the global economy.

"China must not be distracted by temporary difficulties," Fu said. "Transformation means some construction and some destruction, and there will be pain. China needs to be very determined to pursue its dream."