China’s economy is weathering the global slowdown better than expected, the World Bank said Thursday as it raised its growth forecast for the Asian giant to 9.8 percent from 9.4 percent.

The World Bank cited the country’s strong domestic demand and sustained competitiveness in exports.

“Amid weaker and uncertain global prospects, China’s growth will be supported by strong international competitiveness and a robust domestic economy,” David Dollar, the bank’s country director for China, told reporters in Beijing.

Just two months earlier, the World Bank had lowered its growth estimate for China to 9.4 percent from 9.6 percent on weakening demand for its exports.

The back-and-forth revisions reflect the uncertainties prevailing at a time when the U.S. economic outlook remains murky due to the fallout from the mortgage lending crisis. They also result a revision in China’s own gross domestic product growth estimate for 2007, which was raised by a 0.5 percentage points following the bank’s most recent half-yearly report in early April.

“Global growth is on course to slow further and commodity price-driven inflation has become a complicating factor everywhere. These developments imply considerably more international uncertainty and risk,” Dollar said.

“The upward revision to our growth forecast largely reflects revised GDP data showing stronger service sector growth,” he said.

The Chinese government has set a growth target for this year of 8 percent following last year’s sizzling 11.9 percent expansion.

The bank lauded China’s progress in combating inflation, which fell to 7.7 percent in May from 8.5 percent in April. It forecast that the inflation benchmark, the consumer price index, will rise 6 percent in full-year 2008.

___

Didi Tang in Beijing contributed to this report.

___

On the Net:

The World Bank: http://www.worldbank.org