Brisk exports, strong investment and buoyant consumption will lift China's economic growth to 11.2 percent this year, up from an earlier estimate of 10 percent, with the inflation rate breaking 4 percent, says an Asian Development Bank (ADB) report released in Beijing on Monday.
"The faster than expected growth momentum built up this year is expected to carry into 2008," said Zhuang Jian, senior economist of ADB's China Resident Mission, at a news conference.
The new ADB report also forecasts that China's GDP growth in 2008 will reach 10.8 percent, revising from the 9.8 percent in an ADB report published in March.
Zhuang said China's economy grew at a faster-than-expected 11.5 percent in the first half of 2007, which is the highest rate since 1994.
According to Zhuang, China's fast economic growth was led by industry, especially in such sectors as steel, electricity, chemicals, and oil processing.
Strong profitability, buoyant sales and still-low lending rates also drove investment during the period.
The ADB report said investment administered by local governments grew by 28.1 percent in the first six months, nearly doubling the equivalent central government rate.
China's inflation barometer - the Consumer Price Index (CPI) is estimated to hit 4.2 percent this year and 3.8 percent in 2008 as against the previous forecasts of 1.8 percent and 2.2 percent respectively, according to the ADB report.
Zhuang said rising global grain prices and a pig disease outbreak led to rocketing food prices, but this is expected to ease next year, paving the way for the implementation of planned reforms in the pricing of state-controlled sectors such as water, power and natural gas.
Significantly higher than expected inflation, however, poses a risk to the outlook. Zhuang said adverse weather would lower domestic grain production at a time when imported grain prices are high.