CHINA'S economic growth is set to slow to 9.5 per cent this year, from an estimated 13.2 per cent last year, according to a Citibank report. The bank forecasts a stable yuan and moderating inflation as the incentive to shift funds overseas becomes less sharp. Citibank expects the tough financial disciplines introduced last July to help curb illegal capital outflows. Foreign funds are expected to continue to flow in, augmenting foreign-exchange reserves. ''Between now and the end of this century, China will have to spend an estimated 700 billion yuan [about HK$621 billion] to upgrade its infrastructure,'' said the bank. ''To finance these projects, China would, in addition to its own efforts, take bolder steps to encourage foreign investors in those sectors.'' The bank expects the forecast downturn in inflation to be limited by the lifting of price controls on coal from January this year. Coal accounts for 76 per cent of all China's energy consumption. ''The effect will mainly be seen later in 1994 when the higher cost of coal works its way through the system,'' said Citibank. January's introduction of value-added tax is also expected to add to inflationary pressures. Average inflation in major cities this year is forecast to ease to 15 per cent, from an estimated 20 per cent last year. ''However, any premature relaxation of credit across the board could put further pressure on prices, which may lead to higher rate of inflation in 1994,'' said the bank. On external trade, the bank predicts China's trade deficit will fall modestly to US$9 billion in 1994, down from US$12.2 billion in 1993. A severe crackdown on import growth by the government in 1994 seems unlikely as long as China remains enthusiatic about re-entering the General Agreement on Tariffs and Trade. On the other hand, as China's inflation is likely to ease moderately, exports are expected to resume more robust growth in 1994, says the bank.