CHINA was last night poised to overhaul the UK as the world's fourth-largest economy after saying growth last year was 16.8 per cent higher than originally thought.

The sharp revision of data for 2004 was made after officials under-estimated the contribution of service industries to its breakneck development.

Although China lags behind the UK and France at present, analysts said the stronger figures meant it should overtake the output of both nations this year - a year or two sooner then expected.

The UK is estimated by the Treasury to have expanded by 1.75 per cent this year while Chinese economic growth has been running at 9.4 per cent quarter-on-quarter since 1993.

The revision came as the International Monetary Fund (IMF) praised the remarkable stability of the UK economy which has weathered a slowdown in the housing market and higher energy prices.

Although the UK economy hit a soft patch this year, the IMF expected it to grow by 2.25 per cent in 2006 and expand by about 2.75 per cent in 2007. The UK economy is worth £1.21 trillion, just ahead of China's at £1.12 trillion following the revision, which added £161.7bn to the economy in 2004.

The change is likely to reassure economists who feared China was heading for a hard landing because it means the country is less dependent on investment than previously thought and consumption appears to be stronger.

* Chancellor Gordon Brown saw public finances deteriorate sharply yesterday when figures showed the Treasury borrowed more than expected last month.

Figures from the Office for National Statistics showed public sector net borrowing hit £9.3bn last month, compared with £8.5bn in November last year. It followed an increase in Government spending and meant joy at an unexpectedly large surplus in October proved short-lived. Many in the City had been predicting a deficit of about £8bn.

But cumulative figures for the fiscal year were more positive, showing borrowing at £31.4bn between April and November