The World Bank cut its forecast for China's growth this year to 6.5%, below Beijing's target of around 8%, as it it projected that global output would weaken. The Worls bank had previously estimated that China would expand by 7.5% in 2009.

Louis Kuijs, senior economist of the World Bank, said China's year-to-year economic growth will likely be weakest in the early part of 2009. Mr. Kuijs said declines in Chinese exports may have bottomed in February, but full-year exports will likely shrink significantly from last year. Overall they remain very grim, he said.

Chinese exports in February fell 25.7% from a year earlier, the fourth straight decline in this measure.

Government investment and consumption will help growth this year, the World Bank said. Government-influenced direct expenditure will account for 4.9 percentage points of total GDP growth, it said.

The bank said China's fiscal deficit will rise to 3.2% of its GDP this year. Much of that deficit will be as a result of the government's four trillion yuan (around $585 billion) infrastructure-focused stimulus plan, which was announced in November and will run through 2010.

The bank said that Beijing should be prudent about further expansion of its fiscal stimulus this year as it may need to widen its deficit in 2010 if the global slowdown isn't reversed.

Mr. Kuijs urged China to focus more on consumption-oriented fiscal spending and improve the domestic social safety net.

Looking ahead, we think that there are limits to how much the government can beef up investment and infrastructure-oriented stimulus packages in the official manner, he said. Given that China will continue to grow even in the very weak climate, it may make just as much sense to not go for the second or third general fiscal stimulus.

Foreign investment in China fell 16% in February from a year earlier, the fifth-straight month of declining investment, as the global downturn slows capital flows into the world's third-largest economy.

The Ministry of Commerce said direct foreign investment in February totaled $5.83 billion, bringing the total for the first two months of the year to $13.37 billion, down 26% from the same period a year earlier. February's decline was less than the 33% decline the preivous month, when foreign investment totaled $7.54 billion.

The chairman of the U.K.'s Financial Services Authority, laid out his recommendations Wednesday for a profound overhaul of the country's regulatory system in a move that could make the U.K.'s famously light touch a thing of the past.

Lord Adair Turner said the regulatory changes would create a banking system that looks very different from that of the past decade and would also involve rigorous oversight of shadow banking institutions such as hedge funds.

The changes recommended are profound, and the banking system of the future will be different from that of the last decade, said Lord Turner. The world's economy will be better served as a result.

Lord Turner said the Financial Services Authority will need to adopt a more intrusive and systemic approach to regulation, including becoming much more closely involved in the way banks report their earnings.

These policies will inevitably impose some costs, Lord Turner said in a press conference. Bank equity will tend on average to be a slightly lower-return investment, though also lower-risk.