South Korea needs to actively respond to its low birth rate and potential risks from China as they could undermine the nation's economic growth, the top policymaker said Thursday.

Asia's fourth-largest economy has one of the lowest birth rates among the Organization for Economic Cooperation and Development members, which could cripple its growth potential, while the economic slowdown of China, the country's No. 1 trading partner, is also a source of concern.

"Such risks must be handled in an innovative manner with the government and private sector working together to come up with viable countermeasures," Finance Minister Choi Kyung-hwan said during a meeting of a long-term strategy committee.

Choi, who doubles as deputy prime minister for economic affairs, said that now is the time for South Korea, which is about to join the ranks of the world's industrialized economies, to forge ahead with structural reforms that can create a market-centric economy.

"The country must implement systemic reforms to boost market flexibility and welfare," Choi said. "A flexible economy and sustainable welfare systems are critical for the country's future."

His comments come amid a government push to abolish the so-called dual labor market. The dual labor system refers to the gap between full-time regular employees who enjoy "excessive" job security and good pay vis-a-vis non-regular workers whose employment is tenuous and are usually paid less than their regular employee counterparts.

Choi has claimed this system has hurt youth employment, although labor unions have opposed any move to weaken job security.

Touching on the overall state of the economy, Choi said that expansionary fiscal policies, advantageous exchange and interest rates and oil prices along with more transactions in the property market are all pointing to an economic recovery.

"The government expects the upturn in economic indicators, along with the revival of confidence by consumers and businesses, to lead to more consumer spending and investment," he said.

Kim In-ho, the co-chairman of the committee, concurred that change is critical at this juncture, making clear that the government alone cannot resolve all outstanding issues.

"The country needs to change so the necessary reforms can be pushed forward whenever the need arises," said Kim, who also heads the Korea International Trade Association. "The country must pursue a policy of sustainable and inclusive growth."

He also said South Korea needs to reach consensus on such critical matters as the labor market and employment and that, companies must play a leading role in creating more jobs.

The committee, meanwhile, said it plans to announce its final proposal on the country's long-term strategy in the fourth quarter of this year. (Yonhap)