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Last Updated: Wednesday, 10 May 2006, 06:03 GMT 07:03 UK
Chinese growth 'to remain strong'
Chinese steel worker
China's economic growth has been red-hot
The World Bank has upgraded its 2006 economic growth forecast for China to 9.5%, as it said more measures were needed to cool the economy.

It said it had upgraded its forecast from 9.2% to 9.5%, after faster than expected growth at the start of 2006.

China's economy grew by a surprising 10.2% in the first quarter, after total growth of 9.9% for all of 2005.

But a state think-tank has said gross domestic product (GDP) growth should slow to 9.8% in the second quarter.

Money supply

The State Information Centre also said consumer prices would grow by about 1.5% in the quarter.

It has recommended tightening the money supply to cool investment in a bid to halt soaring property prices.

This was echoed by the World Bank on Wednesday, which also called for measures to limit credit to risk sectors such as real estate.

The bank also expects inflation to stay under control, with consumer price growth slowing to 1.8% in 2007 from 2.0% this year.

In March the nation's central bank said GDP growth would maintain a high level.

'Trade frictions'

The think-tank also called for a decrease in the growing foreign exchange reserves, which have been built up by China's large trade surpluses and foreign direct investment.

"The imbalance of international payments has created pressure for the yuan to appreciate," it said.

"Heavy foreign trade surpluses and huge foreign exchange reserves have caused frequent trade frictions."

China's foreign exchange reserves reached a world record $875.1bn (469bn) at the end of March, and economists say they could hit $1 trillion by the end of the year.

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