Production, consumption and investment remained strong in China even as breakneck economic growth slowed throughout the year, Liu Mingkang, chairman of the China Banking Regulatory Commission, told a financial forum.

"The economy is experiencing a soft landing trend, judging from the current point," Liu said.

The world's second-largest economy posted annualised growth of 9.6 percent in the third quarter of 2010, slowing from 11.9 percent in the first three months of the year.

Inflation surged to 5.1 percent in November, the fastest increase in more than two years and above Beijing's full-year target of three percent.

Liu said inflation in 2011 was "likely to be contained at a reasonable level," citing a range of measures taken by the government to ensure adequate and stable supplies of key commodities and goods.

"The government has quite a strong ability to curb inflation," he said at the event sponsored by a magazine.

China's central bank announced in October the country's first interest rate hike in nearly three years, one of several policy levers pulled in a bid to stem the flow of liquidity into the economy, which is fanning inflation.

Zhou Xiaochuan, governor of the People's Bank of China, said at the forum that authorities aimed to speed up liberalisation of the country's interest rate regime to make it more market-based.

The central bank currently sets rates for loans and deposits for all of China's banks.

In comments published Friday in the China Daily, Zhou said more efforts were needed to soak up excess liquidity but warned the central bank should be cautious in raising interest rates.

Liu also said it was becoming harder to keep the economy on an even keel due to sustained weak foreign demand.

He said exporters had been badly squeezed by soaring costs and a rising yuan, which since June has gained 2.5 percent against the dollar amid accusations that Beijing has deliberately kept its currency low to make Chinese export cheaper.

The excess global liquidity, triggered by steps like the Federal Reserve's decision last month to pump 600 billion dollars into the US economy, may also put China at risk, Liu warned.

He said emerging markets likely "face unprecedented pressure" from speculative inflows of such money seeking quick returns in such economies.

"It may cause a significant impact on our economy if our response measures are not forceful enough," he said.

He added many countries were studying the introduction of a tax on foreign exchange transactions intended to discourage speculation, but did not specify whether China was among those considering the move.

earlier related report
Blair urges West to follow China development example
Washington (AFP) Dec 16, 2010 - Former British prime minister Tony Blair said Thursday that China sets a good example for Western governments seeking to help Africa develop.

"There is a reason why a lot of African leaders will deal with China. And it's not just because China is a powerful country," Blair told AFP after giving a speech about development in Africa.

"It's because our systems can be very bureaucratic and the Chinese are quite direct in what they do," he said.

"So they will say to the leader of a country, 'Well what do you need?' and he'll say I need a road from A to B,' and then the next day someone's there with a shovel," he said during a visit to Washington.

In his speech to the Center for Global Development, he said Western countries needed to "work on things the country judges to be vital, not necessarily the things that we think back in our home legislature gets the biggest cheer."

He said he would still encourage Western governments to promote crucial projects, such as those in the area of health and education in Sierra Leone and Liberia -- where his Africa Governance Initiative (AGI) charity works.

"But our priorities have to connect with theirs," he said.

In his brief interview with AFP, he also said both China and Western countries could work in tandem to help develop Africa.

"Now I actually think if we're smart about it and they're smart about it, there are areas of cooperation and partnership where we can do things in the infrastructure field and where there's real Chinese can-do expertise that is a win-win for both of us and the country," he said.

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