The report was published on the day that US aviation giant Boeing Co announced that it had received its first order from China for the ultimate in capitalist conspicuous consumption - the private business plane.

The triumph of the private sector and the creation of a strong middle class with a stake in a liberal economic environment, has made a rollback of reforms inconceivable, CLSA, the Asian investment banking/brokerage unit of French bank Credit Agricole, said in its report, 'China's Capitalists'.

'More than 70 per cent of the mainland's GDP (gross domestic product) and almost all of its new job creation now comes from privately owned small- and medium-sized firms,' the report said.

'This is capitalism with Chinese characteristics.'

The wider social significance of the dramatic transformation of China, will soon become apparent according to CLSA, as China is about to experience slow economic growth.

Unlike a previous slowdown in 1989 and 1990, China will not be thrown into political and economic chaos this time around, it claims.

'The 50 million to 60 million urban households that make up China's middle class - many of them homeowners - have the same kinds of social and economic aspirations as their counterparts in other societies,' it said.

'This middle class, which did not exist in 1990, overlaps with the 75 per cent of the workforce employed by private companies and both populations have a strong interest in social stability and continued market reforms.'

Crucial in CLSA's calculation of the size of China's private economy is the classification of a large group of enterprises often considered to belong in a gray area between the private- and the State-run sector.

While these companies are typically referred to as 'wearing a red hat' because of politically correct designations such as collectively owned, cooperative or joint-ownership, they are generally privately owned and operated.

CLSA says in its report that these categories are usually just thinly disguised private corporations calling themselves something else to avoid coming across as too blatantly capitalist.

'If we acknowledge that today almost all companies registered as collectives and joint-stock companies and other 'red hat' entities are in fact privately owned and operated ... then China's private sector balloons to a 66 per cent share of GDP,' the report said.

This reinterpretation is officially disputed.

'Collective enterprises belong to the group of public-owned enterprises and are different from private owned enterprises,' an official with the National Industrial and Commercial Administration was reported to have said. 'Rather than being private, collective enterprises are a type of state-owned enterprise,' he said.

The CLSA report reproduced testimony from a survey of 30 unnamed entrepreneurs suggesting that a blurring of the categories was a common occurrence.

'We had to claim that our company was owned by a social group, not an individual,' a capitalist in the east Chinese city of Wenzhou was quoted as saying, in the report.

'So we registered our company in the name of everyone living in our street.'