China’s economy to expand 8.5 % in '13, to overtake US in '16: Report

China's economy would expand by 8. 5 per cent in the 2013 and more in 2014, with inflation and export demand the biggest near term risks to growth which would be expected to average 8 per cent in this decade at current rates of investment and reform, the OECD said today.

The assessment of the country's prospects, in its new Economic Survey of China, which was unveiled in Beijing, comes as one of the most upbeat by any of the multilateral institutions.

The 161-page survey, the first such report from the Paris-based OECD since 2010, held a particularly upbeat outlook for investment spending in the world's No.2 economy.

The report pointed to substantial deficits in rail and road capacity in comparison with major economies at similar stages of development, as also to sub-standard housing as offering scope for more profitable spending on infrastructure.

"The level of investment in the private sector is well-founded by the rates of return, and in infrastructure, we still think there are tremendous needs," Richard Herd, the head of the OECD's China desk, told a media conference.

"We're positive on investment in the sense that we see rates of return remaining quite high," he added.

According to many private sector economists, China's GDP growth by the end of this decade would be around 5 per cent rather than the 10  per cent average annual rate it had hit for the last 30 years.

Meanwhile, the flip side of China's development is becoming ever more evident in of all places – Japan.

Thanks to deforestation and overgrazing, increasing amount of the Gobi Desert's grit, along with industrial pollution, is being carried by prevailing winds to Japan.

People in Japan have in recent weeks, been looking up ''PM2.5,'' or fine airborne particulates, on Google that cause disease and premature death in high concentrations. They are increasingly turning to air purifiers as China's environmental crisis becomes Japan's.

Meanwhile, commentators fear the geopolitics of pollution could potentially turn toxic and if Asia's territorial disputes had had raised worries in political circles, well, there was now the prospect of blackened skies that could dominate summit meetings.

Pollution is now emerging as a rallying point for nationalists across Japan, South Korea and Taiwan to gin up anti-China sentiment and business leaders in Hong Kong express anger about having trouble recruiting foreign talent.

China, meanwhile has taken offence at independent reports on health risks; while the world points fingers at the Communist Party as climate change accelerates.

According to some commentators Asia could barely get along now without throwing air pollution in the mix.