China's central bank said it expects the economy to motor ahead with growth in gross domestic product ( GDP) expected to surpass 9.0 percent, with a rise in inflation of about 2.0 percent.

The third quarter monetary report from the People's Bank of China reiterated that it would maintain prudent monetary policy in the fourth quarter as consumption, investment and net exports were expected to push forward economic growth.

"The central bank will ... continue its prudent monetary policy, maintain the continuity and stability of its policy in the fourth quarter, strengthening its fine-tuning (ability)," the report said Wednesday.

China's GDP grew 9.4 percent in the first nine months of 2005, while its main inflation index, the consumer price index (CPI), rose 2.0 percent.

It warned that it expected a rebound in fixed asset investment, which grew 26.1 percent in the first three quarters of the year, but played down the risk of deflation that some analysts have warned about as prices slipped over the year.

Fixed-asset investment, which largely reflects government spending on infrastructure, totalled 5.71 trillion yuan (704 billion dollars) in the nine months to September.

The broad measure of money supply growth was expected to expand by 17 percent in 2005, higher than its previous target of 15 percent.

At the same time, new bank loans would amount to 2.3-2.5 trillion yuan (280-308 billion dollars) this year, just about on target with its full year forecast of 2.5 trillion yuan.

The report, published one day after Washington and Beijing struck a deal to restrict Chinese textile exports, added that risks included trade protectionism and high oil prices.

"The hike in international oil prices has had a negative impact on China's economy and so it is necessary to speed up the reform of the oil pricing mechanism," it said.

While global economic growth would continue to support the growth of Chinese trade, "a rebound in trade protectionism in some countries will cause some uncertainties in our exports," it said

It also reiterated that it would maintain a stable yuan at reasonable and balanced levels while allowing market forces to help determine the unit's value.

Yuan appreciation pressure showed signs of weakening and indicated that the central bank could widen channels for capital outflows, allowing for domestic companies to invest more overseas.

China revalued the yuan by 2.1 percent against the dollar in July and scrapped its long-standing peg to the US unit, linking the currency to basket a major currencies.

Editor: Yan