Feb. 4 (Bloomberg) -- China's economy will probably expand at the weakest pace in six years in 2008 as a global slowdown curbs export growth, the World Bank said.

The Washington-based lender lowered its forecast for growth in Asia's second-largest economy this year to 9.6 percent from a November estimate of 10.8 percent, according to a report issued in Beijing today.

``The slowdown in the global economy should affect China's exports and investment,'' David Dollar, the World Bank's country director for China, said at a briefing. ``However, the momentum of domestic demand should remain robust.''

The World Bank is gloomier about the impact of weaker global growth on the Chinese economy than the International Monetary Fund, which last week kept its 2008 forecast for China unchanged at 10 percent. China's economy expanded 11.4 percent in 2007, its fifth consecutive year of double-digit growth.

``China has the financial power to sustain growth,'' said Louis Kuijs, the World Bank's senior economist for China.

The Chinese government was ``well positioned'' to mitigate the impact of a global downturn as it could stimulate domestic demand by boosting spending and easing credit controls, the World Bank said. The IMF expects growth in the world economy to ease to 4.1 percent this year from 4.9 percent in 2007.

`Pump Money'

China has ``a lot of room to pump money into the economy if they need to,'' said Paul Cavey, Hong Kong-based China economist at Macquarie Securities Ltd. ``The challenge is still to slow things down,'' said Cavey, who estimates growth at between 10 percent and 11 percent this year.

Price pressures should ease in 2008 as rising food costs taper off later this year, Kuijs said.

Inflation in China rose to a 11-year high of 6.9 percent in November, more than double the central bank's annual target, before easing to 6.5 percent in December.

Higher food prices were thus far not spilling over into general inflation and there was no indication that excess demand was fueling price gains, Kuijs said.

Still, relatively high inflation would constrain China's ability to lower interest rates or relax liquidity conditions and Kuijs said ``inflation concerns call for relatively tight monetary policy.''

Companies operating in China are also facing ``a big pipeline of price pressures -- coal and oil among them,'' said Macquarie's Cavey. ``That is cause for concern.''

Producer Prices

Producer prices in China gained 5.4 percent in December from a year earlier, the biggest increase in 31 months, according to government figures.

China's import growth picked up in the second half of last year as export growth declined, with the increase in imports outpacing that of exports for three consecutive months in the fourth quarter, according to the World Bank.

``The fact that import growth was considerably stronger than export growth recently may signal an upcoming slowdown in the rise in the trade surplus,'' the lender said in its quarterly report on the Chinese economy.

To contact the reporter on this story: Kevin Hamlin in Beijing on sadam2@bloomberg.net

Last Updated: February 4, 2008 03:12 EST