China's central bank expects the economy to grow 9.2 percent this year and expand 8.7 percent in the first half of 2006, the Shanghai Securities News said on Monday.

The People's Bank of China also forecast in a recent research report that consumer prices would rise 2.0 percent in 2005 and 2.1 percent in the first half of 2006, the newspaper said.

The annualised figures indicate a slowing economy as China's gross domestic product grew 9.5 percent in the first half of this year.

"We must pay great attention to the impact of surging oil prices, but must also prevent a continued fall in overall domestic prices," the newspaper quoted the report as saying.

China's consumer prices had fallen since March due mainly to sharply slowing growth in food prices, weakening consumer demand and overcapacity of products, in response to Beijing's efforts to cool the economy since early last year, the report said.

Economists have warned of a possible slowdown of China's economy after Beijing's strong economic-cooling steps, with some warning the country could even see deflation by 2008.

AFP, BEIJING

Aug 15: China's industrial output rose 16.1 per cent from a year earlier in July, a slowdown suggesting curbs on real estate investment have helped brake the blistering economy, official data showed Monday.

The July figure for factory-gate goods, which amounted to 581.1 billion yuan (71.6 billion US), compared with a rise of 16.8 per cent in June from a year earlier, the National Bureau of Statistics reported.

In the first seven months to July industrial output increased 16.3 per cent to 3.81 trillion yuan, compared with a growth rate of 17.3 per cent a year earlier and 16.4 per cent in the first half.

"Slowing investment, particularly real estate related investments (is a major force)," said Dong Tao, an economist at Credit Suisse First Boston (CSFB). China slapped curbs on the country's booming real estate market last April amid growing concern that various markets were expanding too quickly and risked a serious financial crisis if prices collapse.

Measures vary from city to city and include a capital gains tax depending on the length of a buyer's holding period, the banning of pre-completion sales and a tightening of land-use rights.

Tao added that the country's persistent power shortages, a problem that has plagued China for the past three years, were also impacting the output of factory goods.

"These two forces are having an effect and we believe China is overall on track for a soft landing," said Dong.

Beijing has tried to engineer a partial slowdown of the economy, which last quarter expanded at 9.4 per cent, but high oil prices are also to blame for trimming corporate profits and therefore production. One sector which saw a marked cooling in July was China's cement output, an industry closely linked to property construction that rose 7.4 per cent, down from more than 17 per cent earlier last year.

However, China's industrial exports still saw robust growth overall, up 391.3 billion yuan, a gain of 26.1 per cent, the bureau said.

Among others sectors, vehicle production soared 27.8 per cent, of which sedans made up 55.4 per cent growth, suggesting that demand in the competitive and struggling industry was rebuilding.

China's steel industry, the world's largest which is undergoing a major restructuring in hopes of making it more competitive, continued to see strong growth despite slowing demand.

Pig iron production jumped 30.7 per cent while crude steel rose 28.6 per cent and steel products manufacturing was up 28 per cent.