September 9, 2010 7:33 AM EDT
The sovereign debt strains plaguing the eurozone could deepen, with Greece and Spain particularly at risk, a senior Chinese central banker said on Thursday.
Li Dongrong, an assistant governor of the People's Bank of China, said Europe's economic recovery had been better than expected but a drive to cut government deficits could dent growth.
Speaking at a financial forum, Li ruled out a double-dip recession but said the global recovery was still fragile and uneven.
Emerging economies faced the twin risks of inflation and capital inflows, Li added.
Turning to China, Li advocated greater flexibility of the yuan CNY=CFXS, which has remained pinned in narrow ranges since a decision on June 19 to scrap its 23-month-old peg to the dollar. He did not elaborate.
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On inflation, Li said there was a need to deepen analysis of China's price trends and to reduce inflationary risk. (Reporting by Langi Chiang and Alan Wheatley; Editing by Ken Wills)
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