CHINA'S economy may grow 10 to 11 percent this year on the back of more fiscal spending, a senior government economist said, striking a more bullish note on the economy than other analysts.

Zhang Yutai, head of the Development Research Center, a think tank under the State Council, China's Cabinet, said that if fiscal expenditure can achieve the target of an 11.4 percent increase this year, China's gross domestic product is expected to grow 10 percent.

"If government spending is even more than that, GDP growth may reach 11 percent from a year earlier," Zhang said, according to a report published yesterday in the Shanghai Securities News.

Some fiscal expenditure is channeled as government investment into infrastructure construction, education, health care and subsidies for start-up businesses. Increased government expenditure can help raise domestic demand and stimulate the economy, Zhang suggested.

In the first half, China's fiscal spending gained 17 percent from a year earlier to 490.8 billion yuan (US$72.3 billion), while fiscal revenue jumped 27.6 percent to 433.4 billion yuan.

Zhang said China's overall economy has maintained stable growth, and a slower pace in recent months represents small adjustments which were required to cool the economy.

China's economic expansion moderated to 10.3 percent from a year earlier in the second quarter, down sharply from the rocket of 11.9 percent in the first three months.

Zhang's forecast of a 10-11 percent GDP increase was more bullish than that of many other economists. The World Bank last month made a 9.5 percent projection for China's economic growth this year. Tao Dong, an economist at Credit Suisse, also said the rate will moderate to 9.5 percent in the following quarters from 11.9 percent in the first three months.

Xia Bin, an adviser on the central bank's monetary policy committee, said the government should ramp up spending in the construction of more affordable housing.

"We should speed up investment in guaranteed housing, avoid an excessively rapid fall in investment and ensure that China's economic growth remains fast and stable," Xia was quoted as saying by Xinhua news agency.

China is scheduled to release its key economic data for July tomorrow.