China's massive stimulus package seems to be taking effect as latest figures show domestic investment and consumption somewhat eased export woes. But when coming to re-balancing the Chinese economy, it's not enough.

While China can jump-start the economy with hefty government investment, it should be more aggressive in speeding up its long-needed shift of growth model to consumption and services, economists say.

Urban fixed-asset investment in the first two months of this year rose 26.5 percent year-on-year, higher than 24.3 percent in the same period in 2008, the National Bureau of Statistics said on Wednesday.

Thursday's NBS data show retail sales in the same period increased 15.2 percent from a year earlier, slower than the 20.2 percent nominal growth of January-February last year but basically steady after adjusting to inflation.

However, economists say some deep-rooted obstacles on the way of re-balancing are yet to be tackled and must be reduced through advancing institutional reforms in economic, social and political areas.

Most of China's current stimulus policies are aimed at short-term growth, with relatively less attention to medium- and long-term needs, said Zhuang Jian, senior economist with the Asian Development Bank Resident Mission in China.

"Without fundamental changes in growth model, even though we ride through this crisis, we'll have the same problems when next one arrives," said Zhuang.

The Chinese government has long been ambitious to make its growth model less dependent on exports and investment and more on consumption, which is more sustainable both for the economy and the environment.

The agenda became more urgent as China felt the brunt of the global financial crisis. With foreign orders dwindling, exports plummeted 25.7 percent year-on-year in February, the worst decline in more than a decade.

Facing a crisis, the Chinese leadership has made it a paramount task to keep economic growth at a level that guarantees plenty of jobs and social stability. One of the most direct and effective way to do that is expanding investment, government officials say.

Zhuang said there's a conflict between the short-term task of maintaining growth and the long-term goal of rebalancing.

"The crux of the matter now is how to strike a balance," he said.