China's economy rebounded stronger than expected and is now forecast to expand by 8.2 percent in 2009,the Asian Development Bank (ADB) said in a report released Tuesday.
The Asian Development Outlook 2009 Update forecast that a surge in bank lending and fixed asset investments would push growth 1.2 percentage points higher than ADB's forecast in March.
The expected maintenance of the government's fiscal stimulus and a moderate recovery in the international economy in 2010 would lift China's growth rate to 8.9 percent in 2010, the report added.
"The massive fiscal stimulus announced last year and the aggressive monetary easing in 2009 has softened the blow of the global slump on the economy," said Jong-Wha Lee, ADB's Chief Economist, in a press release.
The ADB report said major drivers of growth in 2010 will be infrastructure investment, construction, and an expansion of consumption. With only a moderate recovery forecast for the international economy, net exports are expected to make only a minor contribution to growth.
The main risks to the outlook, the report said, is a significantly weaker recovery in the international economy than currently foreseen, and, on the domestic front, an earlier than expected exit from the government's fiscal stimulus package, and concerns that the flood of bank lending, if maintained for too long, could trigger another round of severe monetary policy tightening that would pull growth down again.