DECLINING export growth, notably affected by the U.S. credit crunch, was likely to drag China's GDP growth down to 10.5 percent this year, still above the official target of 8 percent, a leading university research paper said Monday.

China's booming exports are likely to see a sharp decline, that would tame the 11.4 percent GDP growth last year to a slower 10.5 percent in 2008. This was against the backdrop of the subprime mortgage crisis and calming global economy, according to the research paper released by the Economic Research Institute of Renmin University.

The tempered figure, however, would still beat the official target of 8 percent despite the government's cooling measures, the report said. The economic overheating risks showed signs of relief after GDP peaked at 11.4 percent last year, deputy dean of the Economic School of Renmin University Liu Fengliang said.

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

It said inflationary pressures would remain a tricky problem for the Chinese Government after the consumer price index hit a near 12-year high of 8.7 percent in February, and with the continuous price rise in metal, crude oil, and agriculture products. A 1 percent rise in the international energy price would lift China's CPI by 0.1 percent, the report said.

China faced 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. (Xinhua)