The International Monetary Fund (IMF) predicted China's economic growth would reach 10 percent for both 2006 and 2007, according to its latest "World Economic Outlook" released in Singapore on Thursday.

Speaking at a press conference on the release, Raghuram Rajan, economic counselor and director of Research Department of the IMF, said that emerging Asia has once again been the world's most dynamic region in early 2006, driven by buoyant China and India.

He said, however, that China's economy remains heavily reliant on fixed asset investment with excess liquidity contributing to the problem.

"Ultimately, in the market economy that China is rapidly becoming, administrative methods to curb investment are only temporary fixes, akin to using band aid to staunch a gaping wound, "said Rajan.

The best means of control is to alter incentives via prices, he said, admitting that when a number of prices, including the exchange rate and interest rates, are not set by the market, altering any price may have limited effect in the desired direction.

"Moving all prices to market levels may cause pain, but it is ultimately the only way to go, and it is the best to do it when growth is strong," he said.

Source: Xinhua