China’s economy is estimated to grow at 9.8 percent in 2011, with inflation likely to reach 3.7 percent, a media report said on Monday.

The Chinese Academy of Sciences has forecast that the nation’s gross domestic product (GDP) to grow fast in the latter part of the year mainly led by domestic consumption, the Chinese Securities Journal said.

Tight credit controls and high growth in 2010 will slow GDP growth this year, and domestic demand will substitute the investment as the growth engine of the Chinese economy, the government think tank said.

Consumer price index (CPI) in China is expected to peak in the first quarter of the year as a result of rising commodity prices and salaries, and would then fall for the rest of the year, the report said.

However, the measures to increase food supplies, along with excess supply in the manufacturing sector and the appreciation of the yuan, will check the inflation in the latter part of the year.

China’s economy grew 10.3 percent in 2010 with annual inflation reaching 3.3 percent against the government’s target of 3 percent.

In its efforts to curb lending and check rising prices, the People’s Bank of China (PBOC) has raised the interest rates twice since October 2010.