Central bank focuses on inflation (2)

Qian Yingyi, a professor at Tsinghua University who advises the central bank, said earlier the possibility of further interest rate hikes cannot be ruled out this year, if the government is to meet its inflation and money supply targets.

There will not be any major problem in achieving growth targets, he said.

The central bank has left interest rates and reserve requirements for banks unchanged since July.

Chris Leung, a senior China economist at DBS Bank, said China should raise interest rates in the face of inflation risks.

At his press conference on Wednesday, Zhou also warned that China should pay attention to financing vehicles lending to local governments, as 20 percent of the loans could be categorized as risky.

Dong Dasheng, deputy chief of the National Audit Office, said last week that local government debt basically stands at the same level of 10.7 percent as it did at the end of 2010, and total government debt ranges from 15 to 18 trillion yuan ($2.4 to $2.9 trillion), without counting lending guaranteed by different levels of governments.