ADB raises China growth forecast

The Asian Development Bank (ADB) announced Wednesday an increase in its full-year economic growth forecast for China to 10.4%, up from the 9.4% predicted in April. The rise is in keeping with other predictions, which have grown as economists witness Beijing grappling with a spending boom that could spin out of control. Interest rates have been cut twice this year already, cooling measures have been imposed on the property market and bank lending processes have been tightened but this didn't stop China posting a growth rate of 11.3% in the second quarter. The ADB warned that the still-surging levels of investment and imports are a threat to China's long-term stability. The bank, which also raised its growth forecast for 2007 to 9.5% from 8.8%, said compliance from local governments is necessary to peg back excessive investment.