China’s economic growth is expected to fall to 9.6 percent this year from 10.7 percent last year amid a mild slowdown in exports, the World Bank said on February 14. Export growth is likely to decline to 20 percent this year, in real terms, from 24 percent in 2006, the World Bank said in its 21page quarterly update on China.

The World Bank said productivity growth meant exporters would probably be able to continue absorbing the effect of a rising currency and the gradual lowering of export tax rebates. Investment, a main engine of growth in the worlds fourth largest economy in recent years, is unlikely to slow drastically in early 2007, while consumption should grow solidly, it said.

The World Bank urged China to increasingly rely on new sources of growth in the medium term, with a reallocation of labor out of agriculture and into services, and labor intensive urban growth, seen as key. This could boost urban employment, wages and household incomes and reduce rural urban disparities, while mitigating external imbalances, the bank added.

Chinas FDI jumps 14pc

China’s actual foreign direct investment in January was 5.18 billion dollars, a jump of 13.9 per cent over a year ago. Hong Kong, the British Virgin Islands, where many Chinese companies register for tax purposes, and South Korea were the top three sources of foreign direct investment. Companies setting up here from the United States, another large investor in China, declined 5.6 per cent from a year earlier, although the overall level capital investment rose 32.4 per cent.

New firms from the European Union, Chinas largest trading partner, remained at the same level as last January, while capital inflows dropped 68.9 per cent. In total there were 3,370 new foreign funded enterprises created in January, a rise of 10.7 per cent from a year earlier, Last year actual foreign investment in China was 69.5 billion dollars, down 4.1 per cent from 2005.