China's turbo-charged growth eased just a touch in the first quarter, while its inflation jumped to a 32-month high, putting pressure on the government to do more to rein in prices and keep the economy on an even keel.
China's gross domestic product increased by 9.7% in the first quarter from a year earlier, down from 9.8% in the final three months of 2010 but ahead of an expected 9.5% pace.
Consumer price inflation sped to 5.4% in the year to March, the fastest since July 2008 and topping market forecasts for a 5.2% increase.
Taken together, the data published by the National Bureau of Statistics on Friday showed that the world's second-largest economy was still sizzling, little hindered by the central bank's half-year tightening campaign that many investors had feared would undermine growth.
"The economic figures in the first quarter are strong, but still within market expectations. I don't think the economy faces risks of overheating, and the growth momentum will slow down in coming months," said Wang Jin, an analyst with Guotai Junan Securities in Shanghai.
"The central bank will stick with its tightening stance, and we expect more increases in reserve requirements and interest rates," he added.
The People's Bank of China has increased benchmark interest rates four times since last October and has required the country's big banks to lock up a record high of 20.0% of their deposits as reserves.
Inflation had long been expected to run higher in March because of a lower base of comparison. It is likely to register another jump in June and July for the same reason, with officials confident that it will wane in the second half of the year.
Accepting this relatively sanguine view, many economists had thought that the central bank was near the end of its tightening cycle. The median forecast of Reuters poll last week was for just one more interest rate increase over the rest of this year.
But with growth still cruising near double-digits, the scope for the government to continue tightening may be bigger than previously anticipated.
Signalling a potentially hawkish stance in the coming months, Premier Wen Jiabao said this week that the government would use all tools at its disposal to wrestle inflation under control.
"We will try every means to stabilise prices, the top priority of our economic controls this year and also our most pressing task," Wen said at a cabinet meeting.