The central bank says China's economy should grow by 10.5 percent this year, state media reported Sunday, even stronger than the 10 percent predicted last week by the National Bureau of Statistics.

The People's Bank of China also projected growth for the first half of 2007 at 9.5 percent, the official Xinhua News Agency said.

China's economy grew 10.2 percent in 2005 and surged by 10.9 percent in the first half of 2006.

The bank also said China's high rate of domestic spending will continue to grow.

Growth in domestic investment and exports, however, will ease, Xinhua reported, blaming a slowing global economy and "rising trade frictions" for the impact on exports.

The People's Bank report also predicted continuing low Chinese inflation rates ¡ª 1.5 percent in 2006 and 1.8 percent for the first half of 2007.

Last week, the deputy director of the National Bureau of Statistics said China's economy would grow by 10 percent in 2006, while inflation would come in at about 2 percent.

The World Bank and other organizations have forecast China's 2006 economic growth at up to 10.4 percent.