China's economic figures for 2006 due out on Thursday are expected to show a slight cooling of the nation's super-charged economy, as risks remain from high investment levels and huge imbalances.

Asia's second biggest economy is likely to have grown around 10.5 percent last year, after coming off 10.7 percent growth in the nine months to September, and a blistering first half year pace of 10.9 percent.

Economists widely predict that growth will fall near the 10.5 percent mark, fuelled by the usual cocktail of strong investment flows in major industrial projects and exports earnings from ramped up factory production.

The gross domestic product (GDP) forecast will make it China's fourth year of double digit growth, an impressive feat in its own right but one that is tainted by economic imbalances that risk being aggravated in 2007.

"China's economy has systemic problems," said former Morgan Stanley economist Andy Xie.

"It is good at supporting highways (and) factories but a system is not in place to spread wealth around and that is the foundation for sound consumption demand."

Too much investment and overproduction has long been a hallmark of China's unprecedented expansion as government-led industrialisation programmes and overseas businesses have flooded the world's fourth largest economy.

"The quality of growth needs to improve -- overinvestment has led to excess capacity and a growing reliance on exports," said Sun Mingchun, an economist at Lehman Brothers in Hong Kong.

Chinese regulators grappled in 2006 to rein in their more than two trillion dollar economic juggernaut with a stepped up economic austerity program that analysts said yielded mixed results.

Investment in urban roads, real estate and plants in urban China rose 26.6 percent in the first 11 months of 2006, down from the roaring first half pace of 31.3 percent, as regulators targeted certain industries.

Regulators also raised interest rates twice and three times hiked the amount that lenders must hold in their coffers, helping slow the pace of loans in the second half of the year.

Nevertheless flush Chinese banks continued to lend actively, exceeding the government target of 2.5 trillion yuan by more than 580 billion yuan.

Meanwhile, consumer inflation remained at well under two percent for most of last year, but jumped up to 1.9 percent in November from October's 1.4, prompting the central bank to warn of a further acceleration.

The National Bureau of Statistics said last week in a report that bubbles in the real estate, auto and cement industries had been deflated but transport and infrastructure had yet to be tamed.

Wang Qing, an economist at Bank of America in Hong Kong applauded the cooling measures but also questioned their long-term impact.

"The macro-economic adjustments are effective if we look back at the last few months of 2006, but the problem is how long the measures will be useful," he said.

Yet while Beijing may be pleased that another year has passed without an investment-fuelled economic crash, the breakneck pace further soured key trading relations as China's trade surplus soared to a record 177 billion dollars.

"The yawning surplus with the United States and the European Union has strained China's foreign trade environment, triggering more frequent trade friction," Commerce Minister Bo Xilai admitted.

National Economic Reform Commission chief Ma Kai also said last week that China's economic miracle was untenable unless more attention was paid to its people and the environment.

"The price to pay for economic growth is too high," Ma said with surprising candour.

He pointed to the continued risk to stability due to the poverty of rural China compared with the booming cities, while the galloping growth was damaging the environment.

"In the realm of society development, there are still a lot of problems which have to be resolved immediately," he said.

"The promotion of harmony is hard."