The Chinese economic growth is forecast to slow to 9.1 percent in 2011, from an estimate of 10.3 percent this year, and the 9 percent growth is expected to be a new normal for China in the post-crisis period, Bank of America Merrill Lynch said in a regional economic outlook report released on Tuesday.

After fluctuations since late 2008, China's gross domestic product (GDP) growth has stabilized at about 9 percent in both year-on-year and sequential terms, in comparison with the average 11-percent growth in years before the crisis, said the report.

The report, entitled "Asia-Pacific Macro Year Ahead 2011: Certain growth in an uncertain world", expected China's consumption should remain strong next year, supported by higher wage growth.

Investment will probably slow in 2011, but remain supported by government expenditure on housing and public projects. Fixed asset investment is also expected to fall on slower growth of private investment demand as a result of the government's property tightening measures and a lower loan growth, said the report.

A fall in export growth, owing to a higher comparative base and weak recovery in some major developed economies, would lead to the Chinese economic slowdown, it said.

Investment, consumption and export has for many years been driving forces of the Chinese economy.

From 2012 to 2015, the report forecast the Chinese economy is likely to expand by 9 percent, 8.5 percent, 8 percent and 8 percent, respectively. And for the subsequent five years of 2016- 2020, China's GDP growth might average at 7 percent.

Lu Ting, China economist with the Bank of America Merrill Lynch, attributed the "inevitable slowdown" to two major factors -- diminishing gain from institutional reforms and loss of demographic dividends.

"But two drivers also help buck the slowing trend: innovation as a result of rising Research & Development spending and within - country instead of outbound industrial relocation, thanks to the low capital base in China's poorer inland areas," Lu said. Bank of America Merrill Lynch also said in the report China's consumer price index (CPI), a major gauge of inflation, is likely to rise to 4.5 percent in 2011, from 3.3 percent forecast for this year.

CPI inflation may range between 4.5 percent and 5.5 percent in the first half of 2011, and soften to an average of 4 percent in the second half, followed by a moderation in 2012 at around 3.6 percent, said the report.

Lu Ting attributed China's rising inflation to three factors -- credit supply and high broad money growth, surge in wages of migrant workers and increasing inflation expectations in the wake of the second round of US quantitative easing (QE2).

"With 9.1 percent GDP growth, nominal growth of migrant wages could just be around 18 percent to 20 percent, which will contribute to 10 percent of food inflation and 3.3 percent of CPI inflation," said the report.

It also maintained that China would have to get used to an economic slowdown in the long run with a relatively high inflation.

"Looking ahead, trend growth in China is likely to decline, reflecting worsening demographics and lower growth of labor productivity," it said.

(Xinhua News Agency December 15, 2010)