China should not overdo inflation fight: economist

BEIJING (Reuters) - China should not put so much emphasis on fighting inflation that it ends up hurting economic growth, a prominent government economist said in comments published on Monday. Beijing has made curbing price rises its biggest economic priority, while stressing the need to avoid any big ups or downs in economic expansion.

Xia Bin, a senior researcher at the Development Research Centre, a think-tank under the cabinet, said that Beijing should err on the side of avoiding a sharp economic slowdown.

"Concentrating on taming prices should absolutely not be our current priority in setting macro-economic policies," the official Shanghai Securities News quoted Xia as saying.

"Our priority should be, considering the national interest, to strike a proper balance between growth and price rises," he added.

Annual consumer inflation eased to 7.7 percent in May from a near 12-year high of 8.7 percent in February. Annual economic growth slowed to 10.6 percent in the first quarter from 11.2 percent in the fourth quarter of 2007 and 11.9 percent for all of last year.

Xia said that even though China can help bring down global inflation by taming its own prices and demand, the cost of slowing economic growth would be tremendous.

"An abrupt brake at any cost will not benefit the global economy and is likely to give rise to a global crisis," he said.

Xia also called on the United States to take steps to stop the slide in the dollar and to raise interest rates.

(Reporting by Eadie Chen; Editing by Jason Subler and Keiron Henderson)