China's growth is slowing but still looks set to outstrip expectations in 2011, with rapid urbanisation, manufacturing and demand for housing stoking its economy, Rio Tinto said Thursday.

The global miner's China managing director Ian Bauert said monetary tightening is cooling growth, with inflation peaking, high-end property sales softer and stabilising demand prompting destocking.

But investment is rising, the government's social housing programme is driving a construction boom and strong corporate earnings all suggest the economy is still robust, he added, forecasting 9.5 percent growth for 2011.

Noting that many large Chinese provinces are "just beginning to climb the steel intensity curve" and housing demand is strong in lower-tier cities and interior regions, Bauert said "resource-intensive drivers" were buoying growth.

The urban population is set to rise from 50 percent to 70 percent by 2025 and Bauert said there was "huge pent-up demand for affordable housing," with a spike of 200 million people in the past decade and only 44 million units built.

"Highway, rail, port, transmission, subway and secondary and tertiary road networks still require significant expansion," Bauert said in a conference presentation posted on the Australian Stock Exchange.

Policy reforms supported an industrial and infrastructure upgrade, western development and realignment of manufacturing, he added, tipping a soft landing in the medium-term due to high savings and reinvestment of earnings.

Bauert said Rio provided key materials for China's growth, with the Asian giant accounting for 28 percent of its global sales of materials including iron ore, coal, aluminium, copper and diamonds, worth about US$16.7 billion.

The Anglo-Australian giant was also expanding its sourcing of goods and services within China such as pipes, trucks, steel, caustic soda, pilings and ship loaders, with projects potentially worth US$1 billion in 2011.

Beijing's latest growth figures showed a slight slowing in the first quarter to 9.7 percent on-year but inflation at a 32-month high, suggesting official efforts to rein in soaring costs were still falling short.

Relations between Rio and China, its biggest customer, are slowly thawing after four of the miner's staff were jailed in Shanghai for bribery and stealing commercial secrets last year during tense iron ore pricing talks.

Rio this week announced a tie-up with state-run Chinalco, the mineral-hungry nation's biggest alumina producer, to explore copper resources, with the potential to expand into coal and potash "at a later date."

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