Economic growth in China is expected to slow further in 2009 before investment starts to gain strength in the second half of the year, the Anglo-Australian firm said in its annual report, released Tuesday.

Company executives also stressed the importance of a proposed 19.5 billion US dollar deal with China's Chinalco -- Beijing's largest ever foreign investment.

Chief executive Tom Albanese said demand for Rio's products collapsed in the final quarter of 2008 as China's economy slowed more rapidly than expected

"However, we hope to see some recovery in China's gross domestic product in the second half of this year," he said.

Underlining China's importance to Rio, Albanese said: "All projects and near-term capital expenditure will be continuously reassessed in light of demand from China, the prevailing outlook for commodity prices and the falling costs of construction."

He said recent problems had not changed Rio's long-term outlook for China, arguing hundreds of millions of people would need new homes, schools, factories and infrastructure as the Asian giant's cities expanded over the next 20 years.

Chairman Paul Skinner said China's recovery could be as dramatic as its slowdown.

"China particularly may surprise the market ... just as China decelerated sharply, with a strong impact on metals demand, it will also work powerfully in the upswing," he said.

Rio has responded to the downturn by cutting 14,000 jobs globally, attempting to reduce debt to 10 billion US dollars by the end of the year and slashing 2009 capital expenditure by more than half to four billion US dollars.

The mining company warned that if it failed to complete the Chinalco deal and could not sell assets or raise funds from other sources, it may be forced to renegotiate its 40 billion US dollars of debt on tougher terms.

"It will strengthen Rio Tinto's position in the industry during a period in which China's importance in the global economy is growing rapidly," Skinner said.

Australia's government on Monday delayed a decision on whether to approve the investment by the state-owned aluminium firm amid growing concern over foreign ownership in the key sector.

A review of the proposed investment by Chinalco was extended by 90 days to allow further scrutiny of the deal, the Treasury said.

Trade Minister Simon Crean said the criteria the government used when assessing whether foreign investments were in the national interest included considering the contribution they would make to economic growth.

"Our national interest is to go for growth because through growth you create the job opportunities," Crean told reporters.

He said the government wanted to ensure that Australia was self-sufficient when it came to meeting its energy needs and that the country developed resources that "maximise our comparative advantage".

The Australian government is under pressure to preserve jobs after the unemployment rate hit a four-year high of 5.2 percent in February.

Rio warned last month that 2,000 Australian jobs could be at risk if the deal does not receive regulatory approval.

- Dow Jones NewsWires contributed to this report -

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