The country's top think tank said in its "blue book" report on China's economy that Beijing should intensify proactive fiscal policy next year including "appropriately" expanding the fiscal deficit and cutting taxes that hinder economic efficiency.

China has not yet issued an official GDP forecast for 2013, but CASS's status as the premier state-backed centre for academic and policy research means its outlook to a certain extent reflects central government thinking.

"We are cautiously optimistic on the outlook for 2013. We should be alert to possible downside risk and be prepared with enough policies," said the think-tank.

CASS's recommendations are in line with the central leadership's plans to make its macro-economic policies more targeted next year, including allowing more market-determined pricing of resource products and expanding value-added tax reforms.

Authorities plan to maintain controls over the important real estate sector while allowing reform of state firms, the head of the ruling Communist Party Xi Jinping said on Tuesday. His remarks came ahead of the Central Work Committee meeting on economic policy, which is expected to convene early this month.

There are already signs of economic revival in the world's second-largest economy, with two purchasing managers' index (PMI) surveys earlier this week showing the pace of growth in the manufacturing sector has quickened.

"China could unveil further policies to stabilize economic growth when necessary as the government still has relatively extensive room for maneuver in fiscal and monetary policy," Li Xuesong, deputy director of CASS's Institute of Quantitative and Technical Economics told reporters.

"China should increase the fiscal deficit appropriately next year and increase investment on infrastructure construction from central revenue," said Li, without offering a suggested deficit target.

CASS recommended extending value-added tax reforms to more regions and sectors while cutting VAT rates.

China has been working to revamp its outmoded tax regime and help reduce costs for business. It launched a trial tax reform in Shanghai a year ago to replace a business tax with a value-added tax for firms in the transportation and service industries. More cities and provinces have adopted the reform measure this year.

CASS said its 8.2 percent GDP growth forecast is contingent on the European debt crisis not worsening and the U.S. avoiding a "fiscal cliff".

China's annual economic growth dipped to 7.4 percent in the third quarter, slowing for seven quarters in a row and leaving the economy on course for its weakest showing since 1999.

The Chinese economy is expected to gather momentum in the fourth quarter after an uptick in key economic activity indicators in October, following encouraging signs in September, thanks to new pro-growth policies rolled out by the government over recent months.

The think-tank forecast China's inflation would rise to 3.0 percent next year, with export growth at 10 percent and imports up 13.7 percent during the coming year.

China's annual consumer inflation eased to 1.7 percent in October from a year earlier, giving policymakers scope to further loosen monetary policy if needed to support growth.

Meanwhile, China's exports climbed by 11.6 percent in October, the fastest pace since May, with imports growing 2.4 percent.

(Reporting By Xiaoyi Shao and Lucy Hornby; Editing by Eric Meijer)

• A Permanent Economic Emergency