China has issued a pessimistic forecast for its economy this year, saying that domestic consumer spending is weak and that export growth could drop.

The Finance Minister, Xiang Huaicheng, blamed the export problems on lower demand for Chinese products elsewhere in Asia.

The government said it would increase public spending to stimulate consumer and industrial demand.

Despite its problems, correspondents say the Chinese economy continues to enjoy foreign investment, and is predicted to grow by nearly seven per-cent in 1999.