BEIJING, March 21 -- China should create incentives to facilitate industrial innovation and greener economic growth to deal with environmental challenges, experts said here on Friday.

"China is undergoing a transition of economic growth. As China's economic growth is decelerating, its economic structure is approaching a turning point," said Liu Shijin, deputy head of the Development Research Center (DRC) of the State Council, China' s cabinet.

Environmental degradation puts new pressure on growth, and some cities are facing challenges such as industrial overcapacity and air pollution, Liu told a seminar "Embracing Green Wealth," sponsored by the DRC.

China should reevaluate the costs of economic growth powered by the "gray growth model," and let the market play a decisive role in protecting the environment and promote greener growth, Liu said at the seminar prior to the China Development Forum scheduled to begin on Saturday.

Countries need new development models that integrate economic growth, environmental sustainability and social inclusiveness, Howard Bamsey, Director-General of the Seoul-based Global Green Growth Institute, said at the seminar.

"China's energy intensity is much higher than that in developed countries, and the world's second largest economy has great potential to tap in reducing its energy intensity. The government can provide tax and financial incentives to help companies develop a recycling economy," said Wang Xuejun of Peking University.

Initiated in 2000, the forum is a platform for business and academic leaders to interact with China' s top decision makers and economic planners.