Dec. 20 (Bloomberg) -- Nine Dragons Paper Holdings Ltd., China's biggest maker of containerboard, plans to invest as much as $1 billion over the next two years to increase capacity and meet demand, Chief Executive Officer Liu Ming Chung said.

Expansion at the company controlled by China's richest woman Zhang Yin, will require $400 million to $500 million next year and about the same in 2009, Liu said in Hong Kong, where the company is based. Demand for paper products in China will probably outpace economic growth by 5 to 6 percentage points in coming years, Liu said in the interview, conducted in Portuguese.

Containerboard sales are rising as more toys, televisions and other products are packed for shipment. China's economy expanded more than 11 percent in each of the first three quarters of this year as exports surged. Nine Dragons has said it plans to almost double capacity by 2009.

The company plans to invest 2.3 billion yuan ($312 million) to build its fourth factory in the northern Chinese port of Tianjin, according to a Sept. 19 announcement. The factory will be able to produce 800,000 metric tons of paper products a year in its initial phase, starting June 2009. The company has three factories in mainland China, located in the cities of Chongqing, Dongguan and Taicang.

Annual production capacity at Nine Dragons will increase to 10.2 million tons by 2009 from 5.35 million tons, it said in a Sept. 20 earnings statement.

China's exports surged 22.8 percent in November from a year earlier to $117.62 billion, the customs bureau said on Dec. 11. The world's fastest-growing major economy expanded 11.5 percent in the third quarter.

Nine Dragons shares rose 2.7 percent to HK$19.50 at the close of trading in Hong Kong. The stock has risen 46 percent this year, compared with a 35 percent gain in Hong Kong's Hang Seng Index.

To contact the reporter on this story: Carlos Caminada in Sao Paulo at at ccaminada1@bloomberg.net

Last Updated: December 20, 2007 03:35 EST