China should be cautious about the risk of a real estate bubble but the country's overall economic condition is good, World Bank Chief Economist and Senior Vice President Justin Yifu Lin said Tuesday.

Lin said he is confident about the Chinese economy because of its healthy fiscal performance, abundant foreign exchange reserves and potential for growth.

China must carefully study the cases of Japan and Ireland, where collapses of real estate bubbles after years of economic growth caused financial crises and economic stagnation, Lin told a symposium at Peking University Tuesday evening.

A widening income gap has accompanied China's rapid economic growth because of enthusiastic investing, incompetent consumption and trade surpluses, he said.

China is expected to sustain an 8-percent growth rate over the coming 20 years, he added.

The recovery has been unstable because of unemployment and low capacity utilization in developed countries, he said.

Fiscal stimulus is more effective in dealing with such problems than currency measures, he added.

Lin called on developed countries to initiate a new Marshall Plan to assist in the rebuilding of the world economy.