The World Bank has cut its forecast for Chinese economic growth this year to 9.6 per cent - which would be nearly 2 percentage points lower than last year's result - adding to a firming consensus that the economy will slow because of decelerating exports and a weakening global outlook.

The bank says in its quarterly report on the Chinese economy, however, that China is well-placed to manage the knock-on effects of any global slowdown because of a strong domestic economy and the government's relatively buoyant financial position.

Indeed, the bank says a weaker global economy may dovetail with the aims of Chinese policymakers by relieving inflation pressures, their paramount concern, and restraining the contentious trade surplus.

The bank's new forecast of 9.6 per cent for 2008, down from the 10.8 per cent it released last September, is towards the lower end of predictions in recent weeks by China economists.

"The slowdown in the global economy should affect China's exports and investment in the tradable sector," said David Dollar, the World Bank's country director for China.

"However, the momentum of domestic demand should remain robust and a modest global slowdown could contribute to rebalancing of the economy."

China's economy grew by 11.4 per cent in 2007, the fifth consecutive year in which output has risen at double-digit rates.

Separately, yesterday, shares in mainland China soared more than 8 per cent after optimistic statements by government officials eased concerns about the damage done by the recent severe weather, which had fuelled fears of a slowdown in the economy.

Investors were also cheered by two new equity investment funds being approved.

-( Financial Timesservice)