BEIJING China should step up policy support for the economy while promoting reforms to help achieve the annual growth target of around 5%, Yi Gang, former governor of the People's Bank of China (PBOC), said in remarks published on Wednesday.

China's factory output and retail sales grew at a faster pace in August, but tumbling property investment threatens to undercut a flurry of support steps that are showing signs of stabilising parts of the wobbly economy.

"We should appropriately increase macroeconomic policy adjustments, effectively support the expansion of domestic demand and promote a virtuous economic cycle," state media quoted Yi, deputy head of the economic committee of the Chinese People's Political Consultative Conference (CPPCC), as saying.

That will help China achieve the 2023 growth target of around 5%, Yi said.

The government should move to boost the weak confidence of private firms and tackle local government debt risks that have hampered local authorities' ability to support growth, Yi said.

"In the long term, affected by factors such as the slowdown in urbanisation and the population aging, the overall demand for home purchases may fall to a new level," Yi said.

The central bank should use its structural policy tools to support "rigid and improved housing demand", he said.

Yi also called for reforms of China's system on residence permits, or "hukou", and improve social welfare for millions of migrant workers who had entered cities, which will help boost consumption.

(Reporting by Kevin Yao; Editing by Chizu Nomiyama)