Monetary tightening in China should be gradual as consumer inflation is unlikely to surpass 5 percent in 2011, an adviser to the Chinese central bank said.

My understanding is that monetary policy will return to normal in a gradual manner, Li Daokui said in a speech published on Chinese news portal,

China is stepping up its efforts to contain inflation, even as the latest economic report indicates that inflation hovers around a 28-year high of 5.1 percent. Food prices rose 11.7 percent from last year, and from 10.1 percent in October.

In its efforts to tame inflation, China increased banks' reserve requirements six times this year and hiked interest rates once.

The People's Bank of China raised interest rates by 0.25 percent in October, for the first time in three years, to stabilize the rising prices. Economists are expecting further increases in interest rates.

Li, who is also a professor at the Tsinghua University, reiterated that further rate hikes would be needed to bring the nation’s real deposit rates out of negative zone.

I believe the policy will stress flexibility and become more targeted.... [the authorities] will not take strong actions on policy tools closely watched by the public such as interest rates, he said.

He also added that China’s annual inflation would not exceed 5 percent next year as the country possessed huge manufacturing capacity.

Most probably, inflation will climb in the first half due to short-term factors in the Spring Festival and then stabilize in the second half, Li said.