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 China's economy is expected to continue to power ahead with a growth of 9.8 percent this year, and inflation at 3.7 percent, the Chinese Academy of Sciences, a government think tank, predicts in a report.

Despite central government packages to rein in the market, the academy said that housing prices could rise 12.77 percent this year because of high demand and lack of supply.

Economic growth this year may be slower than in 2010 due to a higher base but this will help the world's second-largest economy avoid overheating, the report said on Saturday.

"Domestic consumption will be a more important driver by contributing 94 percent to economic growth, compared with 92 percent in 2010," said Chen Xikang, an academy researcher.

At the beginning of last year, the academy estimated that Gross Domestic Product would grow 10.2 percent in 2010. In fact, China saw GDP expand 10.3 percent to 39.7 trillion yuan (US$6 trillion) yuan.