Paul J. Heytens, the ADB's director for China, said at a press briefing in Beijing that the Chinese economy carries very little risk of a hard landing because growth momentum remains robust for the medium term.

However, any failure to decisively implement the government's agenda to rebalance the economy may jeopardize the sustainability of growth in the longer term, he said.

"One important risk is whether China's rebalancing agenda will be vigorously pursued," Heytens said. "If it is not, China may find at some point in the future growth could begin to slow significantly."

The fragility of external demand along with fiscal and debt concerns in the European Union, China's largest trading partner, and in Japan, as well as the rapid increase in local governments' debts to an estimated 7.6 trillion yuan ($1.2 trillion) are three other downside risks to China's economic outlook, he added.

The bank also predicted that China's Consumer Price Index, a main gauge of inflation, will accelerate to 4.6 percent on average in 2011 as a result of higher global prices for food and oil, rising wages and robust domestic demand. The pace is expected to ease in the second half of the year because of the base effect, the bank said.

The People's Bank of China on Tuesday raised the benchmark interest rate by 25 basis points, taking the one-year deposit rate to 3.25 percent and the one-year lending rate to 6.31 percent. It was China's fourth interest rate hike in less than six months and was seen as signaling the government's determination to fight inflation and asset bubbles.

Consumer prices jumped 4.9 percent in February year-on-year, exceeding the government's full-year target of 4 percent.