An expected global slowdown next year could hit exports, but China's consumption remains robust as it reduces dependence on external demand, the World Bank (WB) said on Wednesday.

"In China we see a quite different economic growth pattern this year and last because of both domestic and external reasons," said Ardo Hansson, lead WB economist in China, at a press conference releasing the China Quarterly Update.

While edging up China's gross domestic product (GDP) growth projection for both 2010 and 2011, the report said that growth in domestic demand would remain strong although exports could suffer from a predicted global economic slowdown next year.

"The expected slowdown in global growth is likely to affect China's exports," the report said, but consumption would benefit from a robust labor market and private sector investment.

China's retail sales, a measure of domestic demand growth, expanded by about 18 percent in recent months, compared to about 15 percent a year earlier.

The world's second largest economy has taken a slew of measures to encourage domestic consumption and reduce export reliance to ensure more sustainable growth. Export growth momentum, for example, has weakened significantly. In the proposed 12th Five-Year Plan (2011-2015), economic rebalancing tops the agenda.

"Changing the growth pattern is rightly a key target," the WB report said. "The need to rebalance to a more domestic demand-led, service-sector oriented growth seems stronger now than five years ago, in part because the international environment is less favorable."

Some developed countries, for example, have complained about China's trade surplus, and the accumulated external surpluses have increased revaluation pressure on the yuan.

Zhou Xiaochuan, the central bank governor, said on Tuesday that the economy's structure would witness substantial and profound changes during the next five years, as the country focuses on stimulating domestic demand.

Accelerating urbanization would bring more demand for non-export categories such as healthcare and education, he said, adding that the focus of investment would also change to the service sector from more traditional areas.

"China could make substantive changes to its economic structure in three years and substantially reduce its reliance on external demand," said Li Daokui, a member of the monetary policy committee of the central bank, at an Oct 29 forum.

Li said China's ratio of trade surplus to GDP is likely to drop below 5 percent this year, down from the pre-crisis level of 10 percent.

"In the past five years, China's reliance on external demand has already declined, and structural changes will certainly occur as the workforce expands and consumption increases naturally," said Dong Xian'an, chief economist of Industrial Securities.

The WB report raised its forecast for China's year-on-year GDP growth for 2010 to 10 percent from 9.5 percent and that for 2011 to 8.7 percent from 8.5 percent.

(China Daily November 4, 2010)