China may raise interest rates in second quarter: Report

SHANGHAI: An adviser to China's central bank said Beijing may raise interest rates in the second quarter if inflation exceeds three percent, state media reported Wednesday.

The world's third largest economy may have grown more than 11 percent in the first three months of the year while full-year growth could reach 9.5 percent, the China Securities Journal quoted Li Daokui as saying.

Li was recently appointed to the People's Bank of China's monetary policy committee, which advises the central bank on interest rates and exchange rate policy.

China is expected to release official first-quarter data on April 15.

The Asian nation returned to double-digit growth in the fourth quarter, expanding 10.7 percent on massive public spending and rampant bank lending.

The government has been clamping down on lending amid fears it is fuelling inflation and causing damaging asset bubbles.

Analysts have predicted an interest rate hike as early as this month after consumer prices rose 2.7 percent in February, up from 1.5 percent in January and close to the government's three percent target for 2010.