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Last Updated: Thursday, 9 February 2006, 11:45 GMT
China's trade surplus 'to fall'
Goods about to be shipped from Shanghai
The size of China's trade surplus has caused controversy
China's economy will grow at 9.2% this year and will become less reliant on exports, according to the World Bank.

The bank's quarterly update said China's politically sensitive trade surplus, which tripled to $102bn (58bn) in 2005, had peaked.

China has been accused of undervaluing its currency, the yuan, in order to gain an unfair trade advantage.

But the bank said rising domestic investment and consumption led Chinese imports to outpace exports in December.

Elsewhere in its report, the bank said consumption in China would not rise fast enough in 2006 to achieve the government's goal of balanced economic growth.

It said China needed to invest more in social services for rural areas to make people there more confident about spending.

Overcapacity

It also noted that the continued strong growth in investment was raising fears that over-capacity could hit some industries, lowering prices and profit margins.

Chinese construction worker at building project in Beijing
The World Bank says too much investment may not be a problem

But the bank's chief economist for China, Bert Hofman, was not too concerned.

"Just because a plant can produce more than it currently does would not necessarily mean that there's a huge problem," he said.

"Especially when, as with China, you are growing at about 10% a year.

"What is 20% overcapacity?" he said. "It just means that you plan two years ahead."

China's economy has grown at about 10% in the past three years, with some experts saying that it might now be the world's fourth largest after the US, Japan and Germany.

The World Bank said that the Chinese government was looking to balance out its economic growth, putting more emphasis on protecting the environment and distributing wealth around the country.




SEE ALSO:
China 'main threat to UK economy'
06 Feb 06 |  Business
China's economy continues to soar
25 Jan 06 |  Business
China sees trade surplus triple
11 Jan 06 |  Business
China lifts annual growth figures
09 Jan 06 |  Business
IMF warns on cost of China's boom
21 Nov 05 |  Business


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