Chinese official warns of threat from inflation

“China can keep inflation in check if we avoid chasing excessive growth in the fourth quarter and in 2010,” Yao said in the online transcript of a speech at a Beijing forum Thursday. “Now that China's growth rate is assured, we should put more of our resources into rebalancing and restructuring China's economy.”

China's cabinet signaled last month that inflation concern will play an increasing role in policy making as record lending adds to the risk of asset bubbles and consumer-price rises in the world's third-biggest economy. The government may tighten monetary policy next year by imposing lending quotas on banks, according to UBS AG and Royal Bank of Scotland.

“With a strong recovery now underway in China, attention is increasingly being paid to the potential consequences of the super-loose monetary and fiscal policies and the attendant exit strategies,” said Wang Qing, chief Asia economist for Morgan Stanley in Hong Kong.

China's economy is assured of expanding 8 percent in 2009 from a year earlier, meeting the government's target, according to Yao. Jiao Jinpu, an official at the central bank's graduate school, told another forum that exports may have returned to growth last month. China's exports fell 15.2 percent in September from a year earlier.

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