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China's Economy to Grow 9.5 Percent in 2010

The World Bank is predicting China's economy will grow 9.5 percent this year, driven by business and household spending.

China's central bank increased bank lending and poured half a trillion dollars into the economy over the past year to fight off the global recession.

The World Bank says the measures were effective, but it warned Wednesday that China will face "significant" inflation this year.

It urged Beijing to let the value of its currency rise, to contain inflation and control spiraling real estate prices.

The International Monetary Fund also called on China Wednesday to let its currency, the yuan, rise. IMF Chief Dominique Strauss-Kahn said the yuan is "much undervalued."

China rejects allegations that it is keeping the value of the yuan low to give it an unfair trade advantage.

China long tied the yuan's value to the U.S. dollar until 2005, when it allowed the currency to appreciate gradually. In mid-2008, it again pegged the yuan to the dollar, fixing the exchange rate at approximately 6.8 yuan to $1.

A cheap currency makes Chinese products less expensive on the international market, boosting sales.

Two U.S. senators introduced legislation Tuesday that would impose penalties on China if the country does not revalue its currency. The proposed law would require the U.S. Treasury Department to identify any undervalued currency, and the U.S. Commerce Department could then impose special tariffs on incoming goods.

China has warned the United States not to "politicize" the value of the yuan, saying it could affect bilateral cooperation in tackling the global economic slowdown.

Some information for this report was provided by AFP, AP and Reuters.