"Though the inflationary pressures on China are increasing in the first half of the year, it is still manageable," Jong-Wha Lee, Chief Economist with the Asian Development Bank (ADB), said in Beijing on Tuesday.

Lee, who is paying a work visit to Beijing, warned China of the risk of a rising asset bubble, the real estate sector in particular, saying such a bubble would bring more challenges for the nation's macro economic control.

"Like other Asian countries, the quick return to strong growth in China will surely accelerate the increase in asset prices," he said.

Moreover, Lee said, the expansion of the Eurozone sovereign debt crisis had increased the uncertainty of the global economic recovery and further reduced the potential for China's exports, a major driver of the country's growth. "In that case, shifting the drivers of growth from monetary support and fiscal expansion to robust private sources is another key challenge for sustaining the recovery in China," said Lee.

He noted that China should speed up revamping the structuring of growth and attach greater emphasis on private consumption to promote economic growth and raise people's living standards.

Lee added that a significant increase in consumption is likely to require a strengthening of the social safety net and the distribution of well-targeted public goods, such as education, health care, and affordable housing, as well as higher incomes.

(Xinhua News Agency July 14, 2010)