BEIJING - China needs to raise interest rates to rein in inflation, which is likely to remain high in the coming years due to rising prices for world raw materials, Li Daokui, Advisor to the Bank of Chinasaid Monday.
But Li, an academic member of the Central Bank's monetary policy Committee, warned against the increase in interest rates too quickly that could attract more hot money into the country.
"China is a unique and huge economy and too much attention is on our economy, so that the interest rate must be carefully managed." "If interest rates are too high, there will be much speculative capital inflows," he said at an economic forum.
The second world is likely to increase 9, 3-9, 4% in 2011 despite the tightening of policy and maintain an average growth of 9 per cent over the next five years, said Li.
"China has entered a new phase of reasonably rapid growth, and I think the economy will maintain a rapid growth over the next five years," said.
A survey of economists showed that they widely expect the world's second economy to extend from 9.5% in 2011, slight decrease of 10.3% last year.
China has lifted requirements Reserve Bank eight times and raised interest rates four times since October to put a lid on rising prices, even after the sign that the economy slowed.
Li also said narrowing trade surplus of China could help ease of foreign pressure on the country to let the yuan rise at a faster clip.
China has posted a trade surplus of 11.4 billion in April exports hit a record, while more than expected lower imports, oscillating back a trade deficit in the first quarter.
But of the higher import costs, with the Government's efforts to rebalance the economy for domestic consumption to reduce its dependence on exports, could lead to a smaller for 2011 trade surplus of $ 183 billion last year.
The China Securities newspaper Monday quoted Li as predicted that China's trade surplus will fall to 100-120 $ billion billion this year.
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