China is expected to overtake the US in actual cash terms by 2023, a leading economist said.

The country's economic growth will rise to 7.9 percent, beating the government's target of 7.5 percent, fueled by China's increased intra-Asia trade, said Douglas McWilliams, an economic adviser at the Institute of Chartered Accountants in England and Wales, a London-based accounting association.

"Global growth as a whole was low last year, but Chinese exports rose by around $150 billion. Around two-thirds of that was increased exports to Asia, which already accounts for about half of foreign sales for China," McWilliams said.

He pointed out that the rise of Asia, Africa and Latin America has effectively made Western economies less crucial for China's economy. For instance, the share of Chinese exports to the EU, Japan and NAFTA regions fell from 17 percent in 2000 to 7 percent in 2012, a downward trend that will continue for years to come.

The use of investment as a policy tool, supported by surging consumption among ASEAN nations, has meant China's growth remains well ahead of global trends, according to the latest quarterly report on China's economy compiled by the institute.

The study suggested that investment has become the key policy tool for boosting growth and it has been deployed successfully in the last quarter of 2012.

Inland provinces are receiving a greater boost than coastal areas, and lower capital stock levels mean that they can make better use of resources.

However, McWilliams warned that bad loans may come back to haunt Chinese banks and could even threaten a credit crunch without government intervention.

"Since investment is primarily financed by bank loans, they need to be paid back from cash flows generated by the investments. Currently, loan losses are increasing in China compared with a year ago. Uneconomical investment in the past can cause a drop in future investment via the banking system," he said.