FACTBOX - China's c.bank governor on future of world economy

BEIJING (Reuters) - From a smooth unwinding of global imbalances to a sharp rise in trade protectionism, Chinese central bank governor Zhou Xiaochuan on Friday laid out six different scenarios for how the world economy might develop in coming years.

Speaking at a forum in Beijing, Zhou focussed on how the core imbalance -- excessive savings in China and excessive consumption in the United States -- might be ironed out, or not.

The People's Bank of China posted Zhou's speech on its website. Here are excerpts from it.

SMOOTH UNWINDING

"This is what we've talked about quite a lot these days, and it is the scenario we most want to see. U.S. households' savings rate and the overall savings rate rise, and Chinese consumer spending also rises, helping correct global imbalances. This is the most ideal. However, the restructuring will touch on many difficult issues, and it will not be easy. At the same time, we cannot assume that this problem can be easily solved just based on recent short-term data."

CHINESE OVERCAPACITY

"The U.S. household savings rate rises and the United States does not need as many Chinese imports as before, which leads to over-capacity, idle facilities, less employment, ushering in a period of low GDP growth for China. We must try hard to avoid this scenario. Another aspect of this scenario is that perhaps inflation could bring about a change in the real exchange rate, leading to restructuring."

CHINA FOCUSES ON DOMESTIC INVESTMENT

"The U.S. household savings rate rises; Chinese consumer spending does pick up, but not by enough, and meanwhile China's urbanisation investment increases. The two factors cause a sufficient fall in surplus savings and savings outflows. In the process, we can assume that urban infrastructure, housing and service facilities will develop significantly to support consumer spending and employment in future. This is also an acceptable option. But we have to reform the system for financing urban development investment, for instance, the issue of municipal bonds -- a problem that has been discussed for many years."