Chinese economy is expected to slow down to grow around 9.6 per cent this year from 10.3 per cent last year, due to inflation pressures and tightening of monetary policy, according to the Asian Development Bank (ADB).

China’s economy is expected to grow 9.6 per cent in 2011 as fixed asset investment remains a key driver, the Bank said in an annual report released here today.

With inflation pressures building and tightened monetary policy, China’s gross domestic product (GDP) growth was forecast to be moderate this year, compared with a growth of 10.3 per cent in 2010, the ADB said in its 2011 Asian Development Outlook, which expected a growth of 9.2 per cent in China in 2012.

China’s inflation rate, which averaged 3.3 per cent in 2010, will pick up to 4.6 per cent in 2011, lifted by abundant liquidity and higher food and commodities prices, it said, estimating that the inflation will ease back to 4.2 per cent in 2012 as commodity prices level off.

Fixed asset investment will remain a key driver of growth, although the expansion rate is set to decelerate slightly from past levels, standing at 22 per cent in 2011 and 20 per cent in 2012, respectively, due to the winding back of fiscal stimulus measures and tighter monetary policy, the bank said.

With the slowdown in major industrial economies, Chinese government has laid out measures to re-balance economic growth drivers in its 12th Five-Year Plan (2011-2015) by putting more emphasis on domestic consumption and services, the bank said.

“Global imbalances have become more pronounced, and the recent global recession highlighted the risk of heavy reliance on foreign demand for growth,” Mr Changyong Rhee, ADB’s chief economist said in a statement released today.

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