According to senior central bank researcher’s Monday statement, as money supply growth accelerated over the recent months China's economy is on the verge of overheating again.

Jiao Jinpu sees the rapid rise in the more narrow measure of money supply, M1, in recent months as an indication that money is flowing at a faster pace. That measure grew 34.6% in November from a year earlier, compared with 29.7% for the broad M2 measure.

Meantime, private-sector economists have noted the recent surge in M1 growth as a harbinger of inflation, however, Jiao's is the most pointed warning so far from a central bank economist.

Consumer prices rose by 0.6% in November from a year earlier, the first rise after nine months of declines.

Annual GDP growth rose to 8.9% in the third quarter, up from a trough of 6.1% in the first three months of the year.

Urban investment rose by 32.1%in the first 11 months of this year compared to the same period a year earlier, while retail sales were up an annual 15.8%in November.

As Jiao predicts, China would maintain rapid economic growth and low inflation in 2010. But he warned serious inflation may take place in China in 2011.

Beijing promises it will focus on its relatively accommodative monetary policy next year, but said it will remain flexible in carrying that out.

Meanwhile, most economists expect some sort of tightening after the first quarter of next year, when authorities are expected to feel the recovery is on more solid footing.

According to the opinion of Fan Jianping, a senior economist with the State Information Centre, Beijing would target 18% growth in M2 in 2010 and aim to keep bank loans below 8 trillion yuan ($1.17 trillion). He expects 31% growth in urban fixed-asset investment, 2.5% consumer inflation and 18.5 percent growth in retail sales next year.