The World Bank predicts that the strong "fundamental competitiveness" of China's manufacturing sector could hasten the recovery of the export sector and contribute to an 8.4 percent growth in 2009.

The World Bank has raised its forecast for China's gross domestic product growth from 7.2 to 8.4 percent, on recovering exports and strong fundamentals, it said in its quarterly report released on Wednesday.

China's economy will, however, require "rebalancing" for growth to be sustained, it said.

The "strong fundamental competitiveness" of China's manufacturing sector could hasten the recovery of the export sector and contribute to growth above the government's 8 percent target, the report said, adding that export growth is expected to resume next year.

"Growth is likely to remain robust in 2010, but the composition will change," it said.

Amid the global economic downturn that hit demand for exports, China's growth was largely supported by the government's stimulus spending that bourgeoned infrastructure projects nationwide, the report said.

The country reported 8.9 percent GDP growth in the third quarter, after slower-than-expected growth of 7.1 percent in the first half, it said.

However, growth can be sustained only if China shifts it focus to put more emphasis on service and, in particular, unleashes the potential of domestic consumption, it said.

Earlier this year, the central government introduced a subsidy scheme for buyers of home appliances in rural communities, while local governments issued shopping vouchers to encourage consumption.

More policy measures - such as the State Council's order to curb industrial overcapacity and cancel redundant projects - are needed to rebalance the economy and overcome the "strong underlying momentum of the traditional pattern," the World Bank said.

With economic growth expected "to increase somewhat" in 2010, the bank said real estate investment will emerge as a driving force for growth next year, while the impact of government-led spending under the 4-trillion yuan stimulus package will start to wane.

(Source: Caijing )