Shanghai -- China's economy is likely to grow at an annual rate of less than 10 percent in 2007, the China Securities Journal reported Wednesday, citing a government-affiliated think tank.

A labourer works on scaffoldings at a construction site in Nanjing, East China's Jiangsu Province October 11, 2006. China's economy is likely to grow at an annual rate of less than 10 percent in 2007.  [Reuters]

The Academy of Macroeconomic Research, which is linked to China's main planning agency, puts economic growth at 10.6 percent in 2006, with the main inflation benchmark, the consumer price index, at 1.5 percent, the China Securities Journal reported.

The government has sought to slow growth with interest rate hikes and restraints on bank lending and other policies aimed at cooling an investment boom, especially in real estate and other construction.

Economic growth slowed to 10.4 percent in the third quarter of the year from a sizzling 11.3 percent in the second quarter. For the nine months that ended in September, growth was at 10.7 percent.

"With the macroeconomic controls taking effect, the economy is moving in the direction of a soft landing," the report said.

But the research institute said the economy still faces some problems, such as the country's huge trade surplus and deteriorating environment.