China should raise interest rates to curb inflation - c.bank adviser

China should continue to raise interest rates to rein in persistent inflation, Li Daokui, adviser to the central bank, said in comments published on Wednesday.

It's "necessary" for the People's Bank of China to raise interest rates to tackle "chronic" inflation, a report on the website of the China Business News quoted Li as saying.

Sustained capital inflows continued to drive up money supply, said Li, a member of the central bank's monetary policy committee who has maintained a hawkish stance on inflation.

The central bank has increased benchmark interest rates twice this year, but the real interest rate level remains deep in negative territory as inflation picks up.

Li, also a professor at Tsinghua University, predicted China's economy would grow 9.5 percent in 2011, down from last year's 10.3 percent.