A top Chinese government research institute forecast on Tuesday that gross domestic product growth would slow moderately in the first half of this year while inflation would rise.
The State Information Centre predicted annual GDP growth of 10.2 percent in the first quarter and 10.0 percent in the second quarter, after 10.7 percent in 2006.
Consumer price inflation is expected to accelerate to 3.0 percent in the first quarter and 3.5 percent in the second from 1.5 percent for all of last year, said the centre, which comes under the auspices of the National Development and Reform Commission, the country's top economic planner.
Nominal interest rates should be raised in order to prevent real interest rates from falling, and medium- and long-term loan rates should be lifted in particular to restrain growth of M1 money supply, the centre recommended.
Noting that share prices in China's domestic markets had been rising rapidly, the centre suggested that authorities speed up initial public offers and listings by big, fast-growing companies.
"This would on the one hand ease the problem of imbalance between demand and supply in the capital markets, and on the other hand cause capital to flow into large, creative enterprises," it argued.
The centre also said authorities should consider speeding up listings of companies' shares on a board for small and medium-sized enterprises in Shenzhen.
This could absorb domestic liquidity while reducing the number of Chinese start-up companies listing on foreign markets to raise capital, thus easing pressure on China's balance of payments, it said.