Mckinsey Global Institute applauded China's rising innovative power and its implications for the global economy in a report titled "the China effect on global innovation."

Taking note of the highly fragmented retail industry in China, which has limited choice for consumers except for the largest cities, the report gave applause to the "world-leading e-commerce industry" built by the Chinese entrepreneurs.

From its start in 1999, Alibaba has grown into the world's largest online marketplace, with $394 billion in value of merchandise sold in its online stores in fiscal year 2014, said the report.

"Nowhere have Chinese entrepreneurs shown a greater flair for innovation than in Internet-based businesses," it said.

Building on the success of today's innovators, "China can continue to evolve into a more mature, productive, and innovation-based economy and may even provide a model for effective innovation approaches around the world," said the report.