MANILA, April 2, 2008 (AFP) - China's economic growth is expected to slow to 10 percent this year as rising food prices drive inflation, the Asian Development Bank said in its annual outlook report released Wednesday.

The warning came just a day after the World Bank cut its growth forecast for China in 2008, as the rising power grapples with rising prices and an expected drop in exports.

The Manila-based ADB said China's gross domestic product (GDP) would only grow by 10 percent this year and 9.8 percent in 2009, after hitting a 13-year high of 11.4 percent in 2007.

It said inflation would likely average 5.5 percent this year, despite Chinese government efforts to keep its surging economy from overheating.

'Aggressive monetary tightening measures, weak global economic prospects and tighter lending policies will bring growth down,' said the report by the ADB's chief economist, Ifzal Ali.

In the face of weaker global demand, China's export growth is also expected to slow to 19 percent this year and 18 percent in 2009, down from 26 percent in 2007, the report said.

On Tuesday, the World Bank announced it had slashed its growth forecast for China this year to 9.4 percent -- and 9.2 percent in 2009 -- as a result of weaker exports.

On fiscal policy, the ADB report said China was expected to let the yuan appreciate against the US dollar in the face of the large trade surplus and surging capital inflows, causing further excess liquidity.

Beijing is also expected to tighten monetary policy further, the bank said.

It said China's economy faces three major risks: the possibility of a more severe global downturn, a possible major fall in domestic property or stock markets, and an acceleration of inflation.

'If all three negative scenarios play out, economic growth could fall to perhaps seven percent,' it said.

China's large trade surplus has aggravated relations with other countries while its heavy reliance on industry for growth has put pressure on its energy supplies and its environment.

While the government has tried to pull up rural incomes and protect the environment, these measures face constraints such as continued incentives for faster growth and weak anti-pollution regulations, the ADB said.