(BEIJING) Declining export growth, notably affected by the US credit crunch, is likely to drag China's GDP growth down to 10.5 per cent this year, but still above the official target of 8 per cent, a leading university research paper said yesterday.

China's booming exports are likely to see a sharp decline, which will tame the 11.4 per cent GDP (gross domestic product) growth last year to a slower 10.5 per cent in 2008, against the backdrop of the sub-prime mortgage crisis and calming global economy, according to the research paper released by the Economic Research Institute of Renmin University. The tempered figure, however, still beats the official target of 8 per cent despite the government's cooling measures, the report said.

The economic overheating risks showed signs of relief after GDP peaked at 11.4 per cent last year, said Liu Fengliang, deputy dean of the School of Economics at Renmin University.

The opinion was echoed by Guo Qingwang, dean of the School of Finance at the university, reckoning the GDP will grow below 11.5 per cent in the coming two years.

It said inflationary pressures will remain a tricky problem for the Chinese government after the consumer price index (CPI) hit a near 12-year high of 8.7 per cent in February, and with the continuous price rise in metal, crude oil and agriculture products. A one per cent rise in the international energy price will lift China's CPI by 0.1 per cent, the report said.

China faces the potential risk of drastic economic fluctuation, while tackling the biggest challenges of soaring prices and mounting inflationary pressure, Premier Wen Jiabao said last Tuesday.

Mr Wen said his government will ensure rapid yet stable economic development and at the same time effectively hold down inflation and address problems of 'unstable, uncoordinated and unsustainable' development.

The report claimed slowing world economic growth, the US dollar appreciation and the repercussions of the credit crunch on China's capital market will add more uncertainties to China's economic outlook this year. -- Xinhua