Mumbai: China's economy may expand by about 10.7 per cent in 2006, exceeding the World Bank estimates of 10.4 per cent, the National Bureau of Statistics said.

Gross domestic product of the world's fourth-largest economy may expand between 10 per cent and 10.7 per cent this year, Yao Jingyuan, chief economist at the bureau, told reporters at a steel conference in Shanghai.

China's central bank, the People's Bank of China, had estimated that the economy would expand at a more than 10 per cent rate in 2006. The central bank also raised interest rates twice this year to curb an investment boom overheating the economy.

China, the world's fastest growing economy, also raised minimum wages and raised welfare give-outs to increase household spending and to curb excessive dependence on exports.

Economic expansion slowed in the third quarter for the first time in a year following lending curbs. Growth in fixed-asset investment and industrial production also moderated since June.

But, despite the tight money policy, retail sales jumped in October at the fastest pace in almost two years as rising incomes spurred consumer spending.

Rising corporate profits also boosted investment, as many companies are financing capacity expansion from retained earnings. Inflation levels in China also remained at the 1.5 per cent level.

China's trade surplus, which surged to a record $23.8 billion in October, is expected to top $150 billion this year.