By Steven C. Johnson and Wanfeng Zhou

NEW YORK, Jan 7 (Reuters) - Reducing imports from China probably would not cut the U.S. trade deficit because the United States would pay more for imports from other countries, World Bank chief economist Justin Yifu Lin said on Thursday.

Instead, Lin said addressing income disparities between China's urban and rural areas would do more to address global imbalances and to spark more domestic consumption.

Since the United States produces few of the goods it buys from China, Lin said it would have to pay more to import those goods from elsewhere, reducing American living standards,

"If the U.S. has to switch the source of imports to other countries, people will have to pay for that," Lin said during a conference at the New York Stock Exchange.

U.S. authorities have over the years urged Beijing to let its currency rise against the dollar to help reduce a large U.S. trade deficit with China and encourage more Chinese spending and more U.S. saving.

But Lin said continued market reforms, including in the financial and natural resource sectors, would chip away at Chinese income disparity and increase domestic consumption.

"Increase the income of common people, reduce the income imbalances, reduce the savings-consumption imbalance," he said. "If China can do that, I think there is hope that it can continue the dynamic growth in the coming decades and contribute to solving global imbalances."

Economists expect China's economy to grow by around 9 percent this year after finishing 2008 with a growth rate of more than 8 percent. China's government said recently it would aim for growth of about 8 percent in 2010.

Lu Feng, an economist with the China Center for Economic Research, told the NYSE conference that China could grow by as much as 11.4 percent this year. And at the current pace of growth, he said the size of China's economy could surpass the United States' by 2025. In 2003, Goldman Sachs predicted that Chinese gross domestic product would pass U.S. GDP by 2041.

Lin did not directly address the dollar-yuan exchange rate. But during a brief question-and-answer session after his speech, he said rapid growth in a developing country will put gradual upward pressure on the currency.

"But the speed of appreciation certainly needs to be considered," he said.

China controls the value of the yuan, as a rapid rise could would make exports more costly and undermine growth.

Lin, the first World Bank chief economist from a developing country, has previously warned against rapid appreciation of the Chinese yuan, saying it could interrupt a global recovery and would do little to redress global imbalances.

After a 2005 revaluation, China's yuan rose gradually against the dollar until mid-2008. Since then, China has held its value steady, increasing its budget surplus and swelling foreign exchange reserves to more than $2 trillion.

"What I think they're looking for is confidence that their export markets are returning, and right now, I don't think they are that confident in the U.S. or European or Japanese economies," said Stephen Orlins, head of the National Committee on United States-China Relations.

(Reporting by Steven C. Johnson and Wanfeng Zhou; Editing by Andrew Hay)