The Asian Development Bank said Tuesday it had revised its forecast on China's year-on-year economic growth to 8.2 percent for 2009.
The new projection for this year is higher than the bank's previous forecast of 7 percent on March 31 and above the goal of 8 percent set by the central government.
The lift in the GDP growth forecast was because of "a surge in bank lending and vigorous fixed-assets investment".
The government rolled out a 4-trillion-yuan (585 billion U.S. dollars) stimulus package in November last year, aiming to boost economic growth slowed by a slump in exports amid the global economic downturn. It also implemented a moderately relaxed, proactive policy to help revive the economy.
"The policy has softened the blow from the global slump," the bank said.
China's economic expansion will surge to 8.9 percent in 2010, the ADB said, contributing the lift to the maintenance of the fiscal stimulus and a likely moderate recovery in the global economy in 2010.
The bank estimated China's consumer price index (CPI) would fall 0.5 percent from a year earlier this year and rise 3.0 percent in 2010.
"Such a scenario might trigger a round of severe monetary belt-tightening in the medium term," the ADB warned, "if the monetary stimulus were to be withdrawn too quickly, there would be a risk of slowing down in growth".
"Authorities face the challenge of balancing the need to maintain aggressive monetary stimulus until growth is sustainable against the risk the flood of bank lending will be diverted into speculation and excess industry capacity," the bank said.
"The predicted 3-percent inflation rate in 2010 is mild and would not trigger big problems, which mean that China will not necessarily need to tighten its monetary and fiscal policy prematurely, gearing down economic growth, said Zhuang Jian, a senior economist with the ADB.
According to the bank, the Chinese economy is currently facing risks brought by the possible fragile overseas demand resulted from the uncertainty in the recovery of the global economy, the unsure future of the government's expansive fiscal policy, possible asset bubbles and non-performing loans caused by the slack monetary policy.
China should work harder in economic restructuring , and in the promotion of domestic demand and employment, the bank said
The Manila-based multilateral bank updated its forecast of average growth in developing Asian economies to 3.9 percent in 2009 from a previous estimate of 3.4 percent made in March.
It also raised its 2010 forecast to 6.4 percent from 6.0 percent.
Firm actions by many governments and central banks, relatively healthy financial systems and a rapid turnaround in less export-dependent economies have pushed forward the region's recovery from the financial crisis, according to the bank.
(Xinhua News Agency September 22, 2009)
