THE World Bank raised its forecast for China's 2011 economic growth rate to 9.3 percent from a previous 9 percent, and called on the government to further tighten its macroeconomic stance to contain risks in inflation and rising property prices.

"China's economic outlook remains broadly favorable with real gross domestic product growth projected at 9.3 percent in 2011 and 8.7 percent in 2012," the China Quarterly Update released yesterday said. "Risks on inflation and rising prices in the property market call for normalization (tightening) of the macroeconomic stance to keep growth on track."

Separately, the International Monetary Fund said in a report yesterday that China's economy may expand 9.6 percent annually in 2011 and 9.5 percent in 2012. It suggested China further tighten macroeconomic policies to minimize inflation.

China has shifted to a prudent monetary policy since the end of last year while keeping fiscal policy relatively easy to sustain growth.

"However, much of the impact of the higher oil and industrial commodity prices is still in the pipeline while inflation expectations are high," said Louis Kuijs, senior economist at the bank and the main author of the report. "Therefore, a full normalization (tightening) of the macro policy stance is important."

Kuijs said macro policy is better placed to address inflationary risks and rising property prices than relying on administrative measures. But the government should maintain fiscal and monetary flexibility to better deal with possible risks.

To battle inflation and surging property prices, the People's Bank of China has raised interest rates twice this year and reserve requirement ratios four times to soak up liquidity.

The report said inflation should ease from a 32-month high of 5.4 percent in March, with food price hikes slowing and core inflation in check.

China's gross domestic product grew 9.7 percent from a year earlier to 9.63 trillion yuan (US$1.45 trillion) in the first quarter.

China has set a target of 8 percent GDP growth this year.