LONDON (AFX) - Treasury Secretary Paul O'Neill warned that Japan's GDP growth limit will remain at 1 pct a year if the country does not clean up its bad loan problem and open its economy. Noting that Japan's GDP has risen around 1 pct annually on average for the past decade, O'Neill said in a press briefing: "In fact, (that) is their real economic potential as long as they persist with what they've been doing." "I think it's clear there are a couple of things that they need to do" for Japan to realise a faster pace of growth around 3.5-4.0 pct, he said. First, Japan must clean up its financial situation, he said, and dispose of the bad loans that continue to impede credit expansion in its economy. Second, Japan should "open their markets to world prices," which would raise productivity growth as Japanese companies are forced to compete with foreign products at lower prices, he said.