According to the Asian Development Bank (ADB), efforts to restructure the economy away from investment- and export-led growth towards private consumption are being disturbed by China's stimulus spending and record bank lending.

A hike in the investment and lending encouraged the bank to increase its forecast for China's economic growth this year to 8.2 percent from a previous estimate of 7 percent. A report released today has displayed an increase by bank in its 2010 forecast to 8.9 percent from 8 percent.

It should be noted that loans to underdeveloped countries are made by the Manila-based bank, in order to promote social and economic growth.

As per the ADB, investment accounted for 6.2 percentage points of China's 7.1 percent economic expansion in the first half, while the consumption contributed 3.8 percentage points, and a plunge in the trade surplus washed off 2.9 percentage points.

The ADB said: "China's government must balance the need to maintain stimulus against the risk that excessive lending could fund speculative stock and property investments, undermine the quality of bank assets, and fuel inflation. Such a scenario might trigger a round of severe monetary tightening in the medium term that would pull growth down again."

ADB predicted inflation rate in China to increase to 3 percent during 2010, following a 0.5 percent decline in prices this year, while also forecasting the surplus to drop this year.

Furthermore, on Tuesday ADB also revised its growth prospects for the Pacific region that includes 14 island economies. It took under consideration the disturbance in tourism revenues and remittances, which occurred due to the financial meltdown.

The Manila-based bank, in an update to its flagship publication Asian Development Outlook, forecast the growth of the region to plunge down to 2.8% in 2009 from 5.2% last year.

As such, the lender somewhat downgraded its March estimate of 3% for full year growth and attributed it to the less optimistic forecast for Timor-Leste.

The report informed, "Growth is seen only for the Pacific's mining and petroleum exporters. Papua New Guinea's full-year growth forecast for 2009 was revised up slightly from March, to 4.5%. The upgrade came as export earnings benefit from a faster than anticipated recovery in key commodity prices."